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The effect of priming in a Bertrand competition game: An experimental study

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  • Jiménez-Jiménez, Francisca
  • Rodero-Cosano, Javier

Abstract

In a Bertrand competition experiment, we study the impact of two cognitive primes on strategic behaviour at first encounter and over time. With this aim, instructions are slightly modified to imprint one of the two incentive features present in a standard Bertrand duopoly: the winning rule (competition) and the winner’s payoffs (cooperation). Therefore, under a between-subject design, we examine pricing behaviour in three treatments: a Competition Priming treatment, a Payoff Priming treatment and a non-priming Baseline. Taking the Baseline as benchmark, the results show that whereas priming for competition reduces significantly market prices from the beginning, priming for payoffs holds market prices at a significantly high level for a longer period. However, the effect of priming fades over time.

Suggested Citation

  • Jiménez-Jiménez, Francisca & Rodero-Cosano, Javier, 2015. "The effect of priming in a Bertrand competition game: An experimental study," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 58(C), pages 94-100.
    • Handle: RePEc:eee:soceco:v:58:y:2015:i:c:p:94-100
    DOI: 10.1016/j.socec.2015.07.006
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    1. Frederiks, Arjan J. & Englis, Basil G. & Ehrenhard, Michel L. & Groen, Aard J., 2019. "Entrepreneurial cognition and the quality of new venture ideas: An experimental approach to comparing future-oriented cognitive processes," Journal of Business Venturing, Elsevier, vol. 34(2), pages 327-347.
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    More about this item

    Keywords

    Bertrand duopoly; Priming; Competition; Cooperation;
    All these keywords.

    JEL classification:

    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • D03 - Microeconomics - - General - - - Behavioral Microeconomics: Underlying Principles

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