Summary.
In this note, we experimentally investigate the extended game with action commitment in a Cournot duopoly with asymmetric cost. Risk dominance considerations allow to select a unique equilibrium in which the low-cost firm is the Stackelberg leader. The data, however, do not support the theory as simultaneous-move play is modal. Average output choices are in line with the Cournot equilibrium. This suggests that Cournot is a much more robust predictor for competition in markets than theory suggests.
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Received: 14 October 2002, Revised: 1 December 2003,
JEL Classification Numbers:
C72, C92, D43.
Correspondence to: Hans-Theo Normann
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Fonseca, M.A., Huck, S. & Normann, HT. Playing Cournot although they shouldn’t. Economic Theory 25, 669–677 (2005). https://doi.org/10.1007/s00199-003-0456-2
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DOI: https://doi.org/10.1007/s00199-003-0456-2