4,790 research outputs found

    Strategic Delegation in Experimental Markets

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    In this experiment, we analyze strategic delegation in a Cournot duopoly. Owners can choose among two different contracts which determine their managers' salaries. One contract simply gives managers incentives to maximize firm profits, while the second contract gives an additional sales bonus. Although theory predicts the second contract to be chosen, it is only rarely chosen in the experimental markets. This behavior is rational given that managers do not play according to the subgame perfect equilibrium prediction when asymmetric contracts are given.Strategic delegation, managerial incentives, experimental economics

    Stability of the Cournot Process - Experimental Evidence

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    We report results of experiments designed to test the predictions of the best reply process. In a Cournot oligopoly with four firms, the best reply process should theoretically explode if demand and cost functions are linear. We find, however, no experimental evidence of such instability. Moreover, we find no differences between a market which theoretically should not converge to Nash equilibrium and one which should converge because of inertia. We investigate the power of several learning dynamics to explain this unpredicted stability.best reply process, Cournot oligopoly, learning experiments, imitation

    To commit or not to commit: Endogenous timing in experimental duopoly markets

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    In this paper, we experimentally investigate the extended game with action commitment of Hamilton and Slutsky (1990). In their duopoly game, firms can choose their quantities in one of two periods before the market clears. If a firm commits to a quantity in period 1 it does not know whether the other firm also commits early. By waiting until period 2, a firm can observe the other firm's period 1 action. Hamilton and Slutsky predict the emergence of endogenous Stackelberg leadership. Our data, however, does not confirm the theory. While Stackelberg equilibria are extremely rare we often observe endogenous Cournot outcomes and sometimes collusive play. This is partly driven by the fact that endogenous Stackelberg followers learn to behave in a reciprocal fashion over time, i.e., they learn to reward cooperation and to punish exploitation.duoploly, endogenous timing, experimental economics

    Anomalous Behavior of Spin Systems with Dipolar Interactions

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    We study the properties of spin systems realized by cold polar molecules interacting via dipole-dipole interactions in two dimensions. Using a spin wave theory, that allows for the full treatment of the characteristic long-distance tail of the dipolar interaction, we find several anomalous features in the ground state correlations and the spin wave excitation spectrum, which are absent in their counterparts with short range interaction. The most striking consequence is the existence of true long-range order at finite temperature for a two-dimensional phase with a broken U(1) symmetry.Comment: 6 pages, 3 figure
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