Siddiqi, Hammad (2009): Coarse Thinking and Collusion in Bertrand Duopoly with Increasing Marginal Costs.
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Mullainathan, Schwartzstein, & Shleifer [Quarterly Journal of Economics, May 2008] put forward a model of coarse thinking. The essential idea behind coarse thinking is that agents put situations into categories and then apply the same model of inference to all situations in a given category. We extend the argument to strategies in a game-theoretic setting and propose the following: Agents split the choice-space into categories in comparison with salient choices and then choose each option in a given category with equal probability. We provide an alternative explanation for the puzzling results obtained in a Bertrand competition experiment as reported in Abbink & Brandts [Games and Economic Behavior, 63, 2008]
|Item Type:||MPRA Paper|
|Original Title:||Coarse Thinking and Collusion in Bertrand Duopoly with Increasing Marginal Costs|
|Keywords:||Laboratory experiments, Oligopoly, Price competition, Co-ordination games, Coarse Thinking|
|Subjects:||L - Industrial Organization > L1 - Market Structure, Firm Strategy, and Market Performance > L13 - Oligopoly and Other Imperfect Markets
C - Mathematical and Quantitative Methods > C9 - Design of Experiments > C90 - General
D - Microeconomics > D8 - Information, Knowledge, and Uncertainty > D83 - Search; Learning; Information and Knowledge; Communication; Belief
D - Microeconomics > D4 - Market Structure and Pricing > D43 - Oligopoly and Other Forms of Market Imperfection
C - Mathematical and Quantitative Methods > C7 - Game Theory and Bargaining Theory > C72 - Noncooperative Games
|Depositing User:||Hammad Siddiqi|
|Date Deposited:||20. Feb 2009 13:42|
|Last Modified:||21. Feb 2013 02:23|
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