An experimental study of coordination and learning in iterated two-market entry games

Rapoport, A. and Seale, D.A. and Winter, E. (2000) An experimental study of coordination and learning in iterated two-market entry games. Economic Theory, 16 (3). pp. 661-687. ISSN 0938-2259

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Abstract

Tacit coordination in large groups is studied in an iterated market entry game with complete information and multiple market capacities that are varied randomly from period to period. On each period, each player must decide independently whether to enter any of the markets, and if entering, which of the two markets to enter. Across symmetric and asymmetric markets, we find remarkable coordination on the aggregate level, which is accounted for by the Nash equilibrium, together with considerable individual differences in frequency of entry and decision rules. With experience, the decisions of most players converge to decision rules with cutoff values on the combined market capacity that determine whether or not to enter but not which of the two markets to enter. This latter decision is determined probabilistically by the differential market capacities. The aggregate and individual results are accounted for quite well by a reinforcement-based learning model that combines deterministic and probabilistic elements.

Item Type:
Journal Article
Journal or Publication Title:
Economic Theory
Uncontrolled Keywords:
/dk/atira/pure/subjectarea/asjc/2000/2002
Subjects:
ID Code:
126890
Deposited By:
Deposited On:
14 Aug 2018 13:10
Refereed?:
Yes
Published?:
Published
Last Modified:
19 Aug 2020 04:41