We report results of a series of experiments designed to test the stability of the best reply process. With linear demand and cost functions, the process is stable if and only if there are less than three firms in the market. However, we find no experimental evidence of such instability in a...

In a seminal paper Bagwell (1995) claims that the first mover advantage, i.e. the strategic benefit of committing oneself to an action before others can do, vanishes completely if this action is only imperfectly observed by second movers. In our paper we report on an experimental test of this...

We introduce a generalized theoretical approach to study imitation models and subject the models to rigorous experimental testing. In our theoretical analysis we find that the different predictions of previous imitation models are due to different informational assumptions, not to different...

In this paper, we experimentally investigate the extended game with action commitment of Hamilton and Slutsky (1990). In their duopoly game, firms can choose their quantities in one of two periods before the market clears. If a firm commits to a quantity in period 1 it does not know whether the...

Recently, the theory of informational cascades has been tested in an experiment by Anderson and Holt (1997) who report that their data support the theory amazingly well. In this note we report on an experiment designed to find out whether observed cascades are indeed due to rational Bayesian...