IDEAS home Printed from https://ideas.repec.org/a/wly/mgtdec/v38y2017i3p382-393.html
   My bibliography  Save this article

Effect of Overconfidence on Cournot Competition in the Presence of Yield Uncertainty

Author

Listed:
  • Xujin Pu
  • Delong Jin
  • Guanghua Han

Abstract

This study investigates the effects of overconfidence on a Cournot competition subject to yield uncertainty. We consider one of two firms to be overconfident, whereas the other is completely rational and derive the Nash equilibrium to compare with that when both firms are completely rational. Through this comparison and analysis, we establish that (i) the relationship between a firm's overconfidence and the likelihood of that firm developing a monopoly in the market is positive; (ii) a rational firm always suffers a loss because of its competitor's overconfidence in a Cournot competition; and (iii) an overconfident firm does not benefit constantly from its overconfidence, although overconfidence results in permanent, increased, and more aggressive market sharing in competitions. Copyright © 2016 John Wiley & Sons, Ltd.

Suggested Citation

  • Xujin Pu & Delong Jin & Guanghua Han, 2017. "Effect of Overconfidence on Cournot Competition in the Presence of Yield Uncertainty," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 38(3), pages 382-393, April.
    • Handle: RePEc:wly:mgtdec:v:38:y:2017:i:3:p:382-393
    as

    Download full text from publisher

    File URL: http://hdl.handle.net/
    Download Restriction: no
    ---><---

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Song, Zhuzhu & Tang, Wansheng & Zhao, Ruiqing & Zhang, Guoqing, 2021. "Inventory strategy of the risk averse supplier and overconfident manufacturer with uncertain demand," International Journal of Production Economics, Elsevier, vol. 234(C).
    2. Samuel N. Kirshner & Zhaolin Li, 2022. "Supply chain contracting with competing regretful retailers," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 43(6), pages 2196-2211, September.
    3. Elizabeth Schroeder & Carol Horton Tremblay & Victor J. Tremblay, 2021. "Confidence bias and advertising in imperfectly competitive markets," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 42(4), pages 885-897, June.
    4. Jean‐Baptiste Tondji, 2022. "Overconfidence and welfare in a differentiated duopoly," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 43(3), pages 751-767, April.
    5. Jain, Tarun & Hazra, Jishnu & Cheng, T.C.E., 2018. "Sourcing under overconfident buyer and suppliers," International Journal of Production Economics, Elsevier, vol. 206(C), pages 93-109.
    6. Wang, Lingling & Wu, Yong & Hu, Shengqiang, 2021. "Make-to-order supply chain coordination through option contract with random yields and overconfidence," International Journal of Production Economics, Elsevier, vol. 242(C).
    7. Dinah A. Cohen-Vernik & Li Yang & Amit Pazgal, 2022. "Strategic Delegation with Differentiated Products," Customer Needs and Solutions, Springer;Institute for Sustainable Innovation and Growth (iSIG), vol. 9(3), pages 66-73, December.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:wly:mgtdec:v:38:y:2017:i:3:p:382-393. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Wiley Content Delivery (email available below). General contact details of provider: http://www3.interscience.wiley.com/cgi-bin/jhome/7976 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.