Multiple Behavioral Rules in Cournot Oligopolies

Abstract

We study intra-individual behavioral heterogeneity in an experimental Cournot oligopoly. Previous empirical results in this setting have demonstrated convergence to competitive outcomes, in agreement with theoretical predictions assuming that players imitate successful opponents. We postulate that players sometimes rely on imitation of successful behavior, and sometimes best reply to the actions of others. Testable predictions are obtained from a model allowing for multiple behavioral rules which accounts for differences in the cognitive nature of the underlying decision processes. Those include non-trivial response time interactions depending on whether the rules share a common prescription (alignment) or not (conflict), a classification which is ex ante observable. The results confirm the hypotheses and support the presence of multiple behavioral rules at the individual level.