Learning in Cournot Oligopoly – an Experiment

This experiment was designed to test various learning theories in the context of a Cournot oligopoly. We derive theoretical predictions for the learning theories and test these predictions by varying the information given to subjects. The results show that some subjects imitate successful behaviour if they have the necessary information, and if they imitate, markets are more competitive. Other subjects follow a best reply process. On the aggregate level we find that more information about demand and cost conditions yields less competitive behaviour, while more information about the quantities and profits of other firms yields more competitive behaviour.