Through trial & error to collusion : the discrete case

by Steffen Huck, Hans-Theo Norman and Jörg Oechssler

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:	May 2000
Authors:	Huck, Steffen ; Normann, Hans-Theo ; Oechssler, Joerg
Publisher:	Bonn : Bonn Graduate School of Economics, Department of Economics, University of Bonn
Subject:	learning \| Cournot oligopoly \| Oligopol \| Oligopoly \| Lernprozess \| Learning process \| Wettbewerbsbeschränkung \| Restraints of competition \| Nash-Gleichgewicht \| Nash equilibrium \| Theorie \| Theory \| Nichtkooperatives Spiel \| Noncooperative game