Events at CERGE-EI

Prof. Steffen Huck

University College London, United Kingdom

Author(s): Steffen Huck

Abstract: 

Imitative behavior is a core element of the human repertoire of adaptive behaviors. In strategic contexts, imitation has theoretically been shown to lead to very competitive outcomes, for example the Walrasian outcome in Cournot games. These predictions have been confirmed in experiments.  However, previous experiments have typically not exceeded 60 rounds of play. We employ the new ConG software to increase number of periods dramatically,  up to 1,200. Behavior in the first 100 rounds is identical to what has been observed earlier. However, after 200 periods there are dramatic changes.
Subjects become strategically more sophisticated and learn to overcome imitation. Interestingly, they do so without understanding best-reply correspondences or playing Nash. Instead, they learn to employ
heuristics that implement effective repeated-game strategies. This ensure very high levels of collusion in duopolies. In triopolies there is more heterogeneity between different markets but collusion is prevalent in many of them.

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