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Learning an Opponent's Strategy in Cournot Competition

UCD-ITS-RP-11-38

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Suggested Citation:
Lin Lawell, C.-Y. Cynthia (2011) Learning an Opponent's Strategy in Cournot Competition. International Journal of Strategic Management 11 (1), 94 - 112

This paper analyzes the dynamics of learning to compete strategically in a Cournot duopoly. The learning in games model used is logistic smooth fictitious play. I develop novel software that can be used to confirm and visualize existing analytic results, to generate ideas for future analytic proofs, to analyze games for which analytic solutions are difficult to derive, and to aid in the teaching of learning in games in a graduate game theory, business strategy, or business economics course. One key result is that there is an overconfidence premium: the worse off a player initially expects her opponent to be, the better off she herself will eventually be.

Keywords: stochastic fictitious play, learning in games