The propagation of cooperation in a model of learning with endogenous aspirations

In this paper we build a spatial, aspiration-based model of learning in the context of Cournot oligopoly from which we want to explore the conditions that lead to the emergence of cooperation among rms. We consider an economy consisting of many identical duopolies; each duopoly is placed on a square of a torus. The duopolists are boundedly rational agents which adopt a very simple behavioural rule: if they are earning at least average pro ts, they do not change their strategies; if they are earning below-average pro ts they imitate the strategy adopted by one of their neighbours. We consider many variations to this simple setup and, in almost all cases, as in Dixon (1998) and Dixon and Lupi (1997) we get results that support cooperation among rms.