An in-class Experiment with Augustin Cournot
Name and surname of author:
DomeNico Raguseo, Mária Horehájová
Experimental Economics, Microeconomics, Game Theory
DOI (& full text):
This paper illustrates the results of an experiment where students were made to play quantity- -setting game based on the Cournot theory of duopoly. The aim of the in-class experiment was to provide…more
This paper illustrates the results of an experiment where students were made to play quantity- -setting game based on the Cournot theory of duopoly. The aim of the in-class experiment was to provide student with a more active way of oligopoly strategy learning. At the same time the experiment served teachers to earn some experiences from learning-by-doing method of teaching. Based on this experiment teachers suppose to introduce similar activities to the study of different decision-making models of firms. Strictly theoretical approach to the study of the oligopolistic market structure was replaced with a learning-by-doing method. Although only a short theoretical lecture preceded quantity-setting game (essential assumptions of Cournot duopoly model were explained), students were able to develop their own strategies from the very beginning of the experiment. Each group of students has understood that their decision about quantity produced was not independent but determined by the decision of the other group. Hence, they had to make assumptions about its rival’s strategy and learn from each additional round of the game. At the end of the experiment students were asked to describe anonymously their opinion about new learning method. They found experiment interesting, stimulating and challenging. They have reported that they have really understood that free rider behavior might harm efficient outcome in market structures where firms can influence the main market variables but not absolutely control them. This experiment shows further possible extension of duopoly in-class game and it also justifies new approach to the study of different market structures.