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Playing Cournot Although They Shouldn't: Endogenous Timing in Experimental Duopolies with Asymmetric Cost
Miguel A. Fonseca, Steffen Huck and Hans-Theo Normann
Vol. 25, No. 3 (Apr., 2005), pp. 669-677
Published by: Springer
Stable URL: http://www.jstor.org/stable/25055904
Page Count: 9
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In this note, we experimentally investigate the extended game with action commitment in a Cournot duopoly with asymmetric cost. Risk dominance considerations allow to select a unique equilibrium in which the low-cost firm is the Stackelberg leader. The data, however, do not support the theory as simultaneous-move play is modal. Average output choices are in line with the Cournot equilibrium. This suggests that Cournot is a much more robust predictor for competition in markets than theory suggests.
Economic Theory © 2005 Springer