LEARNING TO PLAY COURNOT DUOPOLY STRATEGIES

The paper reports results from experiments designed to determine wheth er subjects can learn to play Cournot duopoly strategies and whether t heir out-of-equilibrium play is consistent with the predictions of lea rning models. The experiments include duopolies with constant and with decreasing marginal costs, and with theoretically stable and unstable equilibria. After a few periods, subjects do play stable interior equ ilibria but they do not play stable boundary equilibria nor unstable i nterior equilibria. Subjects' out-of-equilibrium play is inconsistent with the predictions of the learning models. (C) 1998 Elsevier Science B.V. All rights reserved.