Imitation and the evolution of Walrasian behavior: Theoretically fragile but behaviorally robust |
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Authors: | Jose Apesteguia Simon Weidenholzer |
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Affiliation: | a Department of Economics, Universitat Pompeu Fabra, Spain b Department of Economics and ELSE, University College London, United Kingdom c Department of Economics, University of Heidelberg, Germany d Department of Economics, University of Vienna, Austria |
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Abstract: | A well-known result by Vega-Redondo (1997) [18] implies that in symmetric Cournot oligopolies, imitation leads to the Walrasian outcome. We show that this result is not robust to the slightest asymmetry in costs, since every outcome where agents choose identical actions will be played some fraction of the time in the long run. We then conduct experiments to check this fragility. We obtain that, contrary to the theoretical prediction, the Walrasian outcome is a good predictor of market outcomes. Finally, we suggest a new theory based on a mix of imitation and other learning processes that explains subjects' behavior fairly well. |
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Keywords: | C72 C91 C92 D43 L13 |
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