Learning from Own and Foreign Experience: Technological Adaptation by Imitating Firms

  • Authors:

  • B. Bullnheimer;H. Dawid;R. Zeller

  • Affiliations:

  • Department of Management Science, University of Vienna, Brünner Straße 72, A-1210 Vienna, Austria;Department of Management Science, University of Vienna, Brünner Straße 72, A-1210 Vienna, Austria. E-mail: herbert.dawid@univie.ac.at;Department of Management Science, University of Vienna, Brünner Straße 72, A-1210 Vienna, Austria

  • Venue:
  • Computational & Mathematical Organization Theory
  • Year:
  • 1998

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Abstract

In this paper we study the adaptive behavior of firms whichrepeatedly have to make a production decision. In a single good market thefirms use own experience as well as information gathered by observingcompetitors to iteratively choose a production technology out of a given set.The adaptive learning of the firms is described in a dynamic model andanalyzed in a simulation framework. We show that a small but positivepropensity to imitate is optimal for the firms and yields productionefficiencies above 95% of the maximal value. Furthermore, we observe that ina competitive situation firms using optimal propensities to imitate outmatchpure imitators and nonimitators in production efficiency as well as in profits.