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Author: Claudia Keser
Publisher: Springer Science & Business Media
ISBN: 3642481442
Category : Business & Economics
Languages : en
Pages : 162
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Book Description
This report portrays the results of experimental research on dynamic duopoly markets with demand inertia. Two methods of experimentation are studied: game-playing experiments where subjects interact spontaneously via computer terminals, and computer tournaments between strategies designed by subjects. The principal aim of this study is the understanding of boundedly rational decision making in the dynamic duopoly situation. 1. 1 Motivation The experiments examine a multistage duopoly game where prices in each period are the only decision variables. Sales depend on current prices and also on past sales (demand inertia). Applying the game-theoretic concept of subgame perfect equilibrium, the game is solved by backward induction. The result is a uniquely determined system of decision rules. However, we can hardly expect that human beings behave according to the equilibrium strategy of this game. It is unlikely that subjects are able to compute the equilibrium. And even if a subject is able to compute it, he might not make use of this knowledge. Only if he expects the others to behave according to the equilibrium, it is optimal for him to play the equilibrium strategy. We have evidence from several earlier experimental studies on oligopoly markets that, even in less complex oligopoly situations where the equilibrium solutions are very easy to compute, human behavior often is different from what is prescribed by normative theory. ! Normative theory is based on the concept of ideal rationality. However, human capabilities impose cognitive limits on rationality.
Author: Claudia Keser
Publisher: Springer Science & Business Media
ISBN: 3642481442
Category : Business & Economics
Languages : en
Pages : 162
Get Book Here
Book Description
This report portrays the results of experimental research on dynamic duopoly markets with demand inertia. Two methods of experimentation are studied: game-playing experiments where subjects interact spontaneously via computer terminals, and computer tournaments between strategies designed by subjects. The principal aim of this study is the understanding of boundedly rational decision making in the dynamic duopoly situation. 1. 1 Motivation The experiments examine a multistage duopoly game where prices in each period are the only decision variables. Sales depend on current prices and also on past sales (demand inertia). Applying the game-theoretic concept of subgame perfect equilibrium, the game is solved by backward induction. The result is a uniquely determined system of decision rules. However, we can hardly expect that human beings behave according to the equilibrium strategy of this game. It is unlikely that subjects are able to compute the equilibrium. And even if a subject is able to compute it, he might not make use of this knowledge. Only if he expects the others to behave according to the equilibrium, it is optimal for him to play the equilibrium strategy. We have evidence from several earlier experimental studies on oligopoly markets that, even in less complex oligopoly situations where the equilibrium solutions are very easy to compute, human behavior often is different from what is prescribed by normative theory. ! Normative theory is based on the concept of ideal rationality. However, human capabilities impose cognitive limits on rationality.
Author: Claudia Keser
Publisher:
ISBN:
Category :
Languages : de
Pages : 52
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Book Description
Author: Claudia Keser
Publisher:
ISBN:
Category :
Languages : de
Pages : 31
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Book Description
Author: Ralph C. Bayer
Publisher:
ISBN:
Category :
Languages : en
Pages : 0
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Book Description
This paper analyzes dynamic pricing in markets with network externalities. Network externalities imply demand inertia, because the size of a network increases the usefulness of the product for consumers. Because past sales increase current demand, firms have an incentive to set low introductory prices to be able to increase prices as their networks grow. However, in reality we observe decreasing prices. This could be due to other factors dominating the network effects. We use an experimental duopoly market with demand inertia to isolate the effect of network externalities. We find that experimental prices are consistent with real world observations rather than with theoretical predictions.
Author: James Hamilton Holcomb
Publisher:
ISBN:
Category : Duopolies
Languages : en
Pages : 372
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Book Description
Author: JAMES HAMILTON HOLCOMB (JR.)
Publisher:
ISBN:
Category :
Languages : en
Pages : 0
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Author: Jörg Oechssler
Publisher:
ISBN:
Category :
Languages : en
Pages : 24
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Book Description
Author: Friedel Bolle
Publisher: Springer Science & Business Media
ISBN: 3642574580
Category : Business & Economics
Languages : en
Pages : 259
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Book Description
Experimental Economics has experienced a steadily growing interest by economists during the last decade. This may not surprise since laboratory and field experiments obviously provide a further valuable source of empirical evidence of economic behavior besides statistics, econometrics, polls, interviews and simulations. In an overview of the recent developments in Experimental Economics, the present book concentrates on three central themes standing in the actual research focus: bargaining, cooperation and election markets. For each one of these topics the volume presents several state-of-the-art survey articles by experts in the field, accompanied by detailed comments. While the experimental approach sheds new light on the microeconomic standard topics of bargaining and cooperation, the election market approach as a new field may provide better forecasts for political elections - and for soccer World Championships.
Author: Heike Hennig-Schmidt
Publisher: Springer Science & Business Media
ISBN: 3642457754
Category : Business & Economics
Languages : en
Pages : 231
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Book Description
Bilateral bargaining situations are of great importance in reality. Traditional microeconomics, however, make cognitive and motivational assumptions of subjects` full rationality that are revealed as being unrealistic by a growing number of experimental investigations. The present book adds an important contribution to the understanding of principles of boundedly rational behavior by directly observing groups of subjects in a decision situation and videotaping their discussions. A very important result of the book is that the behavior of subjects is guided by aspirations regarding the final outcome. The levels of aspirations are influenced by prominence and different forms of the equity principle resulting in several fairness norms as to the allocation of the amount of money to be divided. Another important feature of the book stems from the analysis of break off discussions and enables a motivational explanation of the emergence of breakdowns in bargaining.
Author: Gary Charness
Publisher: Routledge
ISBN: 1000423026
Category : Business & Economics
Languages : en
Pages : 266
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Book Description
Applying experimental methods has become one of the most powerful and versatile ways to obtain economic insights, and experimental economics has especially supported the development of behavioral economics. The Art of Experimental Economics identifies and reviews 20 of the most important papers to have been published in experimental economics in order to highlight the power and methods of this area, and provides many examples of findings in behavioral economics that have extended knowledge in the economics discipline as a whole. Chosen through a combination of citations, recommendations by scholars in the field, and voting by members of leading societies, the 20 papers under review – some by Nobel prize-winning economists – run the full gamut of experimental economics from theoretical expositions to applications demonstrating experimental economics in action. Also written by a leading experimental economist, each chapter provides a brief summary of the paper, makes the case for why that paper is one of the top 20 in the field, discusses the use made of the experimental method, and considers related work to provide context for each paper. These reviews quickly expose readers to the breadth of application possibilities and the methodological issues, leaving them with a firm understanding of the legacy of the papers’ contributions. This text provides a survey of some of the very best research in experimental and behavioral economics and is a valuable resource for scholars and economics instructors, students seeking to develop capability in applying experimental methods, and economics researchers who wish to further explore the experimental approach.
