Econometrica: May, 1997, Volume 65, Issue 3
Duopoly Strategies Programmed by Experienced Players
Gerald R. Uhlich, Michael Mitzkewitz, Reinhard Selten
The strategy method asks experienced subjects to program strategies for a game. This paper reports on an application to a 20-period supergame of an asymmetric Cournot duopoly. The final strategies after three programming rounds show a typical structure. Typically, no expectations are formed and nothing is optimized. Instead of this, fairness criteria are used to determine cooperative goals, called "ideal points." The subjects try to achieve cooperation by a "measure-for-measure policy," which reciprocates movements towards and away from the ideal point by similar movements. A strategy tends to be more successful the more typical it is.