Experiment 6 GT1

• Stackelberg Model competition is essence

• but simultaneous → Cournot Model

  • no First Mover Advantage anymore

• commitment to best strategy ($Q_1$ = 500) is not valid anymore

  • commitment is only cheap talk
  • Information Set around P1 and P2 choices
  • equilibrium is not dependent on P1’s anymore

• Nash Equilibrium shifts from 500/250 to 333/333

• many first movers wanted to “cheat” by committing to 600, then changing to something lower

• I can make DS Experiment 5 into 6 by P2 not looking at the commitment P1 has done and communicating that to P1

  • also from Stackelberg Model to Cournot Model

Math Expressions

• ${\Pi }_2=P\ast Q^{\ast }=(1-0.0001(Q_1+Q_2))\ast Q_2$
  • maximize → Optimization
  • $Q_2^{\ast }=500-Q_1$
• ${\Pi }_1=P\ast Q^{\ast }=(1-0.0001(Q_1+Q_2))\ast Q_1$
  • maximize → Optimization
  • $Q_1^{\ast }=500-Q_2$
• Nash Equilibrium at 333/333

Shift in Equilibrium: