The ignorant monopolist redux | Zendy

Roger Koenker | Zendy

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The ignorant monopolist redux

Author(s) -

Roger Koenker

Publication year - 2019

Publication title -

econometrics journal

Language(s) - English

Resource type - Reports

DOI - 10.1920/wp.cem.2019.5719

Subject(s) - redux , mathematical economics , economics , grasp , simple (philosophy) , demand curve , microeconomics , computer science , engineering , aerospace engineering , philosophy , epistemology , programming language

. The classical problem of the monopolist faced with an unknown demand curve is considered in a simple stochastic setting. Sequential pricing strategies designed to maximize discounted profits are shown to converge sufficiently rapidly that they leave the monopolist ignorant about all but the most local features of demand. The failure of the monopolist to “learn” his demand curve would seem to call into question some standard assumptions about agents’ grasp of their economic environment.

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