Through Trial & Error to Collusion - The Discrete Case

In this note we study a very simple trial & error learning process in the context of a Cournot oligopoly. Without any knowledge of the payoff functions players increase, respectively decrease, their quantity by one unit as long as this leads to higher profits. We show that despite the absence of any coordination or punishing device this process converges to a collusive outcome.

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Year of publication:	2000
Authors:	Huck, Steffen ; Normann, Hans-Theo ; Oechssler, Jörg
Publisher:	Bonn : University of Bonn, Bonn Graduate School of Economics (BGSE)
Subject:	learning \| Cournot oligopoly

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Series:	Bonn Econ Discussion Papers ; 6/2000
Type of publication:	Book / Working Paper
Type of publication (narrower categories):	Working Paper
Language:	English
Other identifiers:	869247042 [GVK] hdl:10419/78373 [Handle] RePEc:zbw:bonedp:62000 [RePEc]
Classification:	C72 - Noncooperative Games ; L13 - Oligopoly and Other Imperfect Markets
Source:	EconStor

Persistent link: https://www.econbiz.de/10010317631