Just Starting Out: Learning and Equilibrium in a New Market

• 成果类型: Article
• 署名作者: Doraszelski, Ulrich; Lewis, Gregory; Pakes, Ariel
• 署名单位: University of Pennsylvania; Center for Economic & Policy Research (CEPR); National Bureau of Economic Research; Microsoft; Harvard University
• 刊物名称: AMERICAN ECONOMIC REVIEW
• ISSN/ISSBN: 0002-8282
• DOI: 10.1257/aer.20160177
• 发表日期: 2018
• 页码: 565-615
• 关键词: normal-form games; strategic experimentation; INFORMATION; models; CHOICE; reinforcement; rationality; selection; DYNAMICS; auctions

摘要

We document the evolution of the new market for frequency response within the UK electricity system over a six-year period. Firms competed in price while facing considerable initial uncertainty about demand and rival behavior. We show that prices stabilized over time, converging to a rest point that is consistent with equilibrium play. We draw on models of fictitious play and adaptive learning to analyze how this convergence occurs and show that these models predict behavior better than an equilibrium model prior to convergence.