Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/93930
Authors: 
Schipper, Burkhard C.
Year of Publication: 
2005
Series/Report no.: 
SFB/TR 15 Discussion Paper 53
Abstract: 
We analyze a symmetric n-firm Cournot oligopoly with a heterogeneous population of optimizers and imitators. Imitators mimic the output decision of the most successful firms of the previous round a l`a Vega-Redondo (1997). Optimizers play a myopic best response to the opponents' previous output. Firms are allowed to make mistakes and deviate from the decision rules with a small probability. Applying stochastic stability analysis, we find that the long run distribution converges to a recurrent set of states in which imitators are better off than are optimizers. This finding appears to be robust even when optimizers are more sophisticated. It suggests that imitators drive optimizers out of the market contradicting a fundamental conjecture by Friedman (1953).
Subjects: 
profit maximization hypothesis
bounded rationality
learning
Stackelberg
JEL: 
C72
D21
D43
L13
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

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