SFB 303 Discussion Paper No. B - 106

Author: Selten, Reinhard, Michael Mitzkewitz, and Gerald R. Uhlich
Title: Duopoly Strategies Programmed by Experienced Players
Abstract: The strategy method asks experienced subjects to program strategies for a game. This paper reports on an application to a 20-period supergame of an asymmetric Cournot duopoly. The final strategies after three programming rounds show a typical structure. Typically, no expectations are formed and nothing is optimized. Instead of this, fairness criteria are used to determine goals, called "ideal points." The subjects try to achieve cooperation by a "measure-for-measure policy", which reciprocates movements towards and away from the ideal point by similar movements. A strategy tends to be more successful the more typical it is.
Keywords: Duopoly, strategy method, computer tournament
JEL-Classification-Number:
Creation-Date: December 1988
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