What do you want to know? Information acquisition and learning in experimental Cournot games |
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| Authors: | Maria Bigoni |
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| Institution: | 1. University of Milan and Fondazione Eni Enrico Mattei, Italy;2. University of Milan and IEFE-Bocconi, Italy;3. University of Milan-Bicocca and Fondazione Eni Enrico Mattei, Italy;1. Department of Economics, Southern Illinois University Carbondale, Carbondale, IL 62901, USA;2. Institute of Social and Economic Research, Osaka University, 6-1, Mihogaoka, Ibaraki, Osaka 567-0047, Japan;1. Division of Social Science, New York University Abu Dhabi, United Arab Emirates;2. Center for Applied Economics, Department of Industrial Engineering, Universidad de Chile, Chile;1. ISG International Business School (GrIIsG), Paris, France;2. CNRS (EUROFIDAI) and Léonard de Vinci Pôle Universitaire, Finance Lab, Paris La Défense, France |
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| Abstract: | This paper presents an experiment designed to study firms’ behavior and market dynamics, when information about the market structure and opponents’ actions is difficult to acquire and process. Our experimental software controls the information acquisition process of the subjects. Paying attention not only to what players do, but also to what they know, it is possible to better understand the cognitive processes guiding their choices and, consequently, the impact of the informational structure on their behavior. According to our results, Best-Response Dynamics is the main component of subjects’ learning process. We also find that, when subjects look at the strategies individually adopted by their competitors, they tend to imitate the most successful behavior, which drives the market towards a more competitive outcome. |
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