The Propagation of Cooperation in a Spatial Model of Learning with Endogenous Aspirations

  • Paolo Lupi
Conference paper
Part of the Lecture Notes in Economics and Mathematical Systems book series (LNE, volume 484)

Abstract

In this paper we build a spatial, aspiration-based model of learning in the context of a quantity setting oligopoly from which we want to explore the conditions that lead to the emergence of cooperation among firms. We consider an economy consisting of many identical duopoliesj each duopoly is placed on a square of a torus. The duopolists are boundedly rational agents which adopt a very simple behavioural rule: if they are earning at least average profits, they do not change their strategies; if they are earning below-average profits they imitate the strategy adopted by one of their neighbours. We consider many variations to this general setting and, in most of the cases, we get results that support cooperation among firms.

Keywords

Nism Univer Alan Oligopoly 

Preview

Unable to display preview. Download preview PDF.

Unable to display preview. Download preview PDF.

References

  1. 1.
    Luca Anderlini and Antonella Ianni. Path dependence and learning from neighbours. Games and Economic Behavior, 13 (2):141–177, 1996.CrossRefGoogle Scholar
  2. 2.
    Robert Axelrod. The evolution of cooperation. Basic Books, New York, 1984.Google Scholar
  3. 3.
    Robert Axelrod and William D. Hamilton. The evolution of cooperation. Science, 211:1390–96, 1981.CrossRefGoogle Scholar
  4. 4.
    Lawrence E. Blume. The statistical mechanics of strategic interaction. Games and Economic Behavior, 5:387–424, 1993.CrossRefGoogle Scholar
  5. 5.
    David Canning. Average behavior in learning models. Journal of Economic Theory, 57:442–472, 1992.CrossRefGoogle Scholar
  6. 6.
    Huw D. Dixon. Keeping Up with the Joneses: Competition and the evolution of collusion in an oligopolistic economy. Research Papers in Economics 1810, Center for Economic Policy Researh, 1998.Google Scholar
  7. 7.
    Huw D. Dixon and Paolo Lupi. Learning with a known average: a simulation study of different learning rules. Discussion Papers in Economics 97/18, University of York, 1997. Presented at the III International Conference on Computing in Finance and Economics. Stanford, June 1997.Google Scholar
  8. 8.
    Glenn Ellison. Learning, local interaction, and coordination. Econometrica, 61 (5):1047, 1993.CrossRefGoogle Scholar
  9. 9.
    R. Hoffmann and N. Waring. The localization of interaction and learning in the repeated prisoner’s dilemma. Technical report, Santa Fe Institute, 1996.Google Scholar
  10. 10.
    N. Jonard and M. Yildizoglu. Thecnological diversity in an evolutionary industry model with localized learning and network externalities. Mimeo University Louis Pasteur-Strasbourg, 1997.Google Scholar
  11. 11.
    Michihiro Kandori, George J. Mailath, and Raphael Rob. Learning, mutation, and long run equilibria in games. Econometrica, 61 (1):29–56, Jan 1993.CrossRefGoogle Scholar
  12. 12.
    Oliver Kirchkamp. Evolution and Learning in Spatial Models. PhD thesis, University of Dusseldorf, 1996.Google Scholar
  13. 13.
    Ramon Marimon. Learning from learning in economics. In David M. Kreps and Kenneth F. Wallis, editors, Advances in Economics and Econometrics: Theory and Applications, volume I of Econometric Society Monographs, chapter 9, pages 278–315. Cambridge University press, Cambridge UK, 1997.Google Scholar
  14. 14.
    Ramon Marimon and Ellen McGratten. On adaptive learning in strategic games. In Alan Kirman and Mark Salmon, editors, Learning and Rationality in Economics, chapter 3. Blackwells, 1995.Google Scholar
  15. 15.
    Sidney Siegel. Level of aspiration and decision making. Psychological review, 64 (4):253–262, 1957.CrossRefGoogle Scholar
  16. 16.
    Herbert A. Simon. Administraive Behaviour: a Study of Decision-making Processes in Administrative Organizations. MacMillan, 1947.Google Scholar
  17. 17.
    Herbert A. Simon. The Science of the Artificial. MIT press, Cambridge, Massachussets, third edition, 1996.Google Scholar

Copyright information

© Springer-Verlag Berlin Heidelberg 2000

Authors and Affiliations

  • Paolo Lupi
    • 1
  1. 1.Department of Economics and Related StudiesThe University of YorkHeslington, YorkUK

Personalised recommendations