By Claudia Keser
This file portrays the result of experimental study on dynamic duopoly markets with call for inertia. tools of experimentation are studied: game-playing experiments the place topics engage spontaneously through computing device terminals, and laptop tournaments among suggestions designed by means of matters. The important goal of this research is the knowledge of boundedly rational determination making within the dynamic duopoly scenario. 1. 1 Motivation The experiments study a multistage duopoly video game the place costs in every one interval are the single choice variables. revenues depend upon present costs and likewise on prior revenues (demand inertia). making use of the game-theoretic inspiration of subgame excellent equilibrium, the sport is solved by means of backward induction. the result's a uniquely made up our minds method of determination principles. although, we will not often anticipate that people behave based on the equilibrium technique of this online game. it's not going that matters may be able to compute the equilibrium. or even if a topic is ready to compute it, he would possibly not utilize this information. provided that he expects the others to act in accordance with the equilibrium, it really is optimum for him to play the equilibrium procedure. we've facts from a number of prior experimental stories on oligopoly markets that, even in much less advanced oligopoly events the place the equilibrium options are really easy to compute, human habit frequently isn't the same as what's prescribed via normative idea. ! Normative concept is predicated at the inspiration of excellent rationality. even if, human functions impose cognitive limits on rationality.
Read Online or Download Experimental Duopoly Markets with Demand Inertia: Game-Playing Experiments and the Strategy Method PDF
Best experiments books
Utilizing Discrete selection Experiments to price health and wellbeing and healthiness Care takes a clean and contemporay examine the turning out to be curiosity within the improvement and alertness of discrete selection experiments (DCEs) in the box of health and wellbeing economics. The authors have written it with the aim of giving the reader a greater knowing of concerns raised within the layout and alertness of DCEs in health and wellbeing economics.
Additional info for Experimental Duopoly Markets with Demand Inertia: Game-Playing Experiments and the Strategy Method
We see that for both firm types the average long-run profit has increased in the second plays. The high cost firms have gained in both plays more than predicted by normative theory: 105% of the equilibrium profit in the first plays and 122% in the second plays. But the low cost firms reached only 83% of the equilibrium profit in the first plays and 93% in the second plays. However, if we consider the realized percentage of the profit which would be gained in the myopic monopoly solution, the low cost firms have reached a higher percentage than the high cost firms in both plays.
The realizations of the actual markets are indicated by dots while the stars repesent the points of the Pareto frontier. We see that some of the strongly cooperative markets make profits very close to the Pareto frontier. Aggressive markets can be clearly distinguished from cooperative markets by their distance to the Pareto frontier. We also see that the long-run profit of the high cost firms is a very strong indicator to identify aggressive and cooperative markets. The high cost firms of the aggressive markets make a lower profit than the high cost firms of the cooperative markets.
A dot means that some observations fall into the considered field, but less than one percent of all the observations. In the first tournament, 45% of the observations lie in the field of profit between 140 000 and 160 000 for the low cost firm and between 100 000 and 120 000 for the high cost firm. We may consider this the "field of cooperative behavior". In the case that each firm always sets its myopic monopoly price, the resulting profits lie in these ranges. Seven percent of the markets even play exactly the myopic monopoly solution.