The East End, the West End, and King’s Cross

Steffen Huck, Wieland Müller & Nicolaas J. Vriend
We study experimentally a standard four–player Hotelling game, with a uniform density of consumers and inelastic demand. The pure strategy Nash equilibrium configuration consists of two firms located at one quarter of the "linear city", and the other two at three quarters. We do not observe convergence to such an equilibrium. In our experimental data we find three clusters. Besides the direct proximity of the two equilibrium locations this concerns the focal mid–point. Moreover, we...
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