Oligopolies with Misspecified and Uncertain Price Functions, and Learning

摘要: The previous chapters have already dealt with the behavior of boundedly rational firms in an oligopoly. Although know true demand relationship, we assumed that they do not their competitors’ quantity choices. Instead form expectations about these quantities and base own decisions on beliefs. In particular, focused several adjustment processes might use to determine selections investigated circumstances under which such lead convergence Nash equilibrium static oligopoly game. However, information environment may be incomplete accounts. For example, players misspecify function or just misestimate slope reservation price, market saturation point. if wrong estimates, will realize beliefs are incorrect, since data observe (for prices quantities) different from predictions. Obviously, try update relationship this give rise process. other words, learn game playing. Following line thought, chapter study models assumption either misspecified price functions (Sect. 5.1) certain parameters 5.2). main questions want answer following. If understand a as steady state some non-equilibrium process “learning,” what happens incorrect model environment? Does reasonable adaptive based best response) converge anything? so, does it converge? Is limit can observed when play perceived games (close to) underlying model? situation consistent (limit) players?