How can complex economic behavior be investigated? The example of the ignorant monopolist revisited

The theory of economic decision-making behavior at the level of the organization is reexamined and developed, while allowing for more complex conditions than usually assumed. As an example, the problem of the initially ignorant monopolist is chosen as one who has to adapt in pricing, capacity, and output to the observed realization of a stochastic demand process. In the tradition of computer-based simulation approaches to the theory of the firm's behavior, an extended modeling procedure is proposed. The intricacies involved in the attempt to test hypotheses empirically on complex economic behavior are discussed, as well as test records obtained in laboratory experimentation with the ignorant monopolist's problem.