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Cost Structures and Nash Play in Repeated Cournot Games

Published online by Cambridge University Press:  14 March 2025

Douglas D. Davis ,
Robert J. Reilly  and
Bart J. Wilson
Douglas D. Davis
Affiliation:
Department of Economics, Virginia Commonwealth University, Richmond, VA 23284-4000, USA
Robert J. Reilly
Affiliation:
Department of Economics, Virginia Commonwealth University, Richmond, VA 23284-4000, USA
Bart J. Wilson
Affiliation:
Interdisciplinary Center for Economic Science, George Mason University, Fairfax, VA 22030, USA
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Abstract

This paper reports an experiment designed to assess the effects of a rotation in the marginal cost curve on convergence in a repeated Cournot triopoly. Increasing the cost curve's slope both reduces the serially-undominated set to the Nash prediction, and increases the peakedness of earnings. We observe higher rates of Nash equilibrium play in the design with the steeper marginal cost schedule, but only when participants are also rematched after each decision. Examination of response patterns suggests that the treatment with a steeper marginal cost curve and with a re-matching of participants across periods induces the selection of Nash Consistent responses.

Keywords

experimental economicsCournot competitionserially undominated equilibria

JEL classification

D43: Oligopoly and Other Forms of Market Imperfection C91: Laboratory, Individual Behavior C72: Noncooperative Games
Type
Research Article
Information
Experimental Economics , Volume 6 , Issue 2 , October 2003 , pp. 209 - 226
Copyright
Copyright © 2003 Economic Science Association

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