Hostname: page-component-7b9c58cd5d-v2ckm Total loading time: 0 Render date: 2025-03-16T16:21:11.792Z Has data issue: false hasContentIssue false
  • English
  • Français

“A profit table or a profit calculator?” A note on the design of Cournot oligopoly experiments

Published online by Cambridge University Press:  14 March 2025

Till Requate  and
Israel Waichman
Till Requate*
Affiliation:
Department of Economics, University of Kiel, Kiel, Germany
Israel Waichman*
Affiliation:
Department of Economics, University of Kiel, Kiel, Germany
*
e-mail: requate@economics.uni-kiel.de
e-mail: waichman@economics.uni-kiel.de
Get access Rights & Permissions [Opens in a new window]

Abstract

We report on an experiment conducted to evaluate the effects of varying the way in which market information is presented to participants in laboratory Cournot duopolies. We find that the most standard variations, which are the use of a profit table or a profit calculator, yield indistinguishable performance. However, the addition of a best-response option to the profit calculator tends to increase aggregate output to the Cournot level and decrease the incidence of tacit collusion.

Keywords

Cournot oligopolyLaboratory experimentProfit tableProfit calculatorBest-response calculator

JEL classification

D21: Firm Behavior: Theory C92: Laboratory, Group Behavior L13: Oligopoly and Other Imperfect Markets C72: Noncooperative Games
Type
Research Article
Information
Experimental Economics , Volume 14 , Issue 1 , March 2011 , pp. 36 - 46
Copyright
Copyright © Economic Science Association 2010

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

Footnotes

Electronic supplementary material The online version of this article (doi: 10.1007/s10683-010-9256-2) contains supplementary material, which is available to authorized users.

References

Altavilla, C., Luini, L., & Sbriglia, P. (2006). Social learning in market games. Journal of Economic Behavior and Organization, 61, 632–652.CrossRefGoogle Scholar
Beil, R. O. (1988) Collusive behavior in experimental oligopoly markets. PhD thesis, Texas A&M.Google Scholar
Bigoni, M. (2010). What do you want to know? Information acquisition and learning in experimental Cournot games. Research in Economics, 64, 1–17.CrossRefGoogle Scholar
Binger, B. R., Hoffman, E., & Libecap, G. D. (1991). Experimental methods to advance historical investigation: an examination of cartel compliance by large and small firms. In Mokyr, J. (Ed.), The vital one: essays in honor of Jonathan R.T Hughes, Research in Economic History, Supplement 6, pp. 309–324.Google Scholar
Bosch-Doménech, A., & Vriend, N. J. (2003). Imitation of successful behavior in Cournot markets. Economic Journal, 113, 495–524.CrossRefGoogle Scholar
Bru, L., Gomez, R., & Ordonez, J. M. (2002). Information in repeated experimental Cournot games. In Isaac, R. M. & Holt, C. A. (Eds.), Experiments investigating market power (pp. 191–215). Amsterdam: JAI/Elsevier.CrossRefGoogle Scholar
Cason, T. N., & Mason, C. F. (1999). Information sharing and tacit collusion in laboratory duopoly markets. Economic Inquiry, 37, 258–281.CrossRefGoogle Scholar
Cox, J. C., & Walker, M. (1998). Learning to play Cournot duopoly strategies. Journal of Economic Behavior and Organization, 36, 141–161.CrossRefGoogle Scholar
Daughety, A. F., & Forsythe, R. (1987a). The effects of industry-wide price regulation on industrial organization. Journal of Law, Economics, and Organization, 3, 397–434.Google Scholar
Daughety, A. F., & Forsythe, R. (1987b). Industrywide regulation and the formation of reputations: a laboratory analysis. In Bailey, E. E. (Ed.), Public regulation: new perspectives on institutions and policies (pp. 347–398). Cambridge: MIT Press.Google Scholar
Davis, D.D., Reilly, R.J., & Wilson, B. (2003). Cost structures and Nash play in repeated Cournot games. Experimental Economics, 6, 209–226.CrossRefGoogle Scholar
Duersch, P., Kolb, A., Oechssler, J., & Schipper, B. (2010). Rage against the machines: how subjects play against learning algorithms. Economic Theory, 43, 407–430.CrossRefGoogle Scholar
Feltovich, N. (2003). Nonparametric tests of differences in medians: comparison of the Wilcoxon-Mann- Whitney and Robust rank-order tests. Experimental Economics, 6, 273–297.CrossRefGoogle Scholar
Fischbacher, U. (2007). z-Tree: Zurich toolbox for ready-made economic experiment. Experimental Economics, 10, 171–178.CrossRefGoogle Scholar
Fligner, M. A., & Policello, G. E. (1981). Robust rank procedures for the Behrens-Fisher problem. Journal of the American Statistical Association, 76, 162–168.CrossRefGoogle Scholar
Fonseca, M., Huck, S., & Normann, H. T. (2005). Playing Cournot although they shouldn't. Economic Theory, 25, 669–677.CrossRefGoogle Scholar
Fonseca, M., Müller, W., & Normann, H. T. (2006). Endogenous timing in duopoly: experimental evidence. International Journal of Game Theory, 34, 443–456.CrossRefGoogle Scholar
Fouraker, L., & Siegel, S. (1963). Bargaining behavior. New York: McGraw-Hill.Google Scholar
Hoggatt, A. C. (1959). An experimental business game. Behavioral Science, 4, 192–203.CrossRefGoogle Scholar
Holcomb, J. H., & Nelson, P. S. (1997). The role of monitoring in duopoly market outcomes. Journal of Socio-Economics, 79–93.CrossRefGoogle Scholar
Holt, C. A. (1985). An experimental test of the consistent-conjectures hypothesis. American Economic Review, 75(3), 314–325.Google Scholar
Huck, S. (2004). Oligopoly. In Friedman, D. & Cassar, A. (Eds.), Economics lab: an intensive course in experimental economics (pp. 105–114). London: Routledge.Google Scholar
Huck, S., & Wallace, B. (2002). Reciprocal strategies and aspiration levels in a Cournot-Stackelberg experiment. Economics Bulletin, 3, 1–7.Google Scholar
Huck, S., Normann, H. T., & Oechssler, J. (1999). Learning in Cournot oligopoly—an experiment. Economic Journal, 109, 80–95.CrossRefGoogle Scholar
Huck, S., Normann, H. T., & Oechssler, J. (2000). Does information about competitors’ actions increase or decrease competition in experimental oligopoly markets? International Journal of Industrial Organization, 18, 39–57.CrossRefGoogle Scholar
Huck, S., Müller, W., & Normann, H. T. (2001). Stackelberg beats Cournot: on collusion and efficiency in experimental markets. Economic Journal, 111, 749–765.CrossRefGoogle Scholar
Huck, S., Müller, W., & Normann, H. T. (2002a). To commit or not to commit: endogenous timing in experimental duopoly markets. Games and Economic Behavior, 38, 240–264.CrossRefGoogle Scholar
Huck, S., Normann, H. T., & Oechssler, J. (2002b). Stability of the Cournot process: experimental evidences. International Journal of Game Theory, 31, 123–136.CrossRefGoogle Scholar
Huck, S., Normann, H. T., & Oechssler, J. (2004). Two are few and four are many: number effects in experimental oligopolies. Journal of Economic Behavior and Organization, 53, 435–446.CrossRefGoogle Scholar
Huck, S., Konrad, K. A., Müller, W., & Normann, H. T. (2007). The merger paradox and why aspiration levels let it fail in the laboratory. Economic Journal, 117, 1073–1095.CrossRefGoogle Scholar
Le Coq, C., & Orzen, H. (2006). Do forward markets enhance competition? Experimental evidence. Journal of Economic Behavior and Organization, 61, 415–431.CrossRefGoogle Scholar
Mason, C. F., & Phillips, O. R. (1997). Information and cost asymmetry in experimental duopoly markets. Review of Economics and Statistics, 79, 290–299.CrossRefGoogle Scholar
Mason, C. F., Phillips, O. R., & Redington, D. B. (1991). The role of gender in a non-cooperative game. Journal of Economic Behavior and Organization, 15, 215–235.CrossRefGoogle Scholar
Mason, C. F., Phillips, O. R., & Nowell, C. (1992). Duopoly behavior in asymmetric markets: an experimental evaluation. Review of Economics and Statistics, 74, 662–670.CrossRefGoogle Scholar
Müller, W. (2006). Allowing for two production periods in the Cournot duopoly: experimental evidence. Journal of Economic Behavior and Organization, 60, 100–111.CrossRefGoogle Scholar
Oechssler, J., & Schuhmacher, F. (2004). The limited liability effect in experimental duopoly markets. International Journal of Industrial Organization, 22, 163–184.CrossRefGoogle Scholar
Offerman, T., Potters, J., & Sonnemans, J. (2002). Imitation and belief learning in an oligopoly experiment. Review of Economic Studies, 63, 973–997.CrossRefGoogle Scholar
Pantz, K., & Ziegelmeyer, A. (2005). Collaborative networks in experimental triopolies. Papers on Strategic Interaction 2005-38, Max Planck Institute of Economics.Google Scholar
Potters, J., & Suetens, S. (2009). Cooperation in experimental games of strategic complements and substitutes. Review of Economic Studies, 76, 1125–1147.CrossRefGoogle Scholar
Raab, P., & Schipper, B. C. (2009). Cournot competition among teams: an experimental study. Journal of Economic Behavior and Organization, 72, 691–702.CrossRefGoogle Scholar
Rassenti, S., Reynolds, S. S., Smith, V. L., & Szidarovszky, F. (2000). Adaptation and convergence of behavior in repeated experimental Cournot games. Journal of Economic Behavior and Organization, 41, 117–146.CrossRefGoogle Scholar
Saijo, T., & Nakamura, H. (1995). The spite dilemma in voluntary contribution mechanism experiments. Journal of Conflict Resolution, 39, 535–560.CrossRefGoogle Scholar
Selten, R., & Ostmann, A. (2001). Imitation equilibrium. Homo Oeconomicus, 18, 111–149.Google Scholar
Selten, R., & Sauermann, H. (1959). Ein Oligopolexperiment. Zeitschrift für die gesamte Staatwissenschaft, 115, 427–471.Google Scholar
Waichman, I., Requate, T., & Siang, C. K. (2010). A Cournot experiment with managers and students: evidence from Germany and Malaysia. The BE Journal of Economic Analysis and Policy (Topics) 10, Article 30.Google Scholar
Supplementary material: File

Requate and Waichman supplementary material

Requate and Waichman supplementary material
Download Requate and Waichman supplementary material(File)
File 985 KB