Communication, Renegotiation, and the Scope for Collusion
AbstractWe use experiments to analyze what type of communication is most effective in achieving cooperation in a simple collusion game. Consistent with the existing literature on communication and collusion, even minimal communication leads to a short run increase in collusion. However, in a limited message-space treatment where subjects cannot communicate contingent strategies, this initial burst of collusion rapidly collapses. When unlimited pre-game communication is allowed via a chat window, an initial decline in collusion is reversed over time. Content analysis is used to identify multiple channels by which communication improves collusion in this setting. Explicit threats to punish cheating prove to be by far the most important factor to successfully establish collusion, consistent with the existing theory of collusion. However, collusion is even more likely when we allow for renegotiation, contrary to standard theories of renegotiation. What appears critical for the success of collusion with renegotiation is that cheaters are often admonished in strong terms. Allowing renegotiation therefore appears to increase collusion by allowing for an inexpensive and highly effective form of punishment.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
Bibliographic InfoPaper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 7563.
Date of creation: Nov 2009
Date of revision:
Contact details of provider:
Postal: Centre for Economic Policy Research, 77 Bastwick Street, London EC1V 3PZ
Phone: 44 - 20 - 7183 8801
Fax: 44 - 20 - 7183 8820
Find related papers by JEL classification:
- C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
- C73 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Stochastic and Dynamic Games; Evolutionary Games
- C92 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Group Behavior
- D03 - Microeconomics - - General - - - Behavioral Microeconomics; Underlying Principles
- D43 - Microeconomics - - Market Structure and Pricing - - - Oligopoly and Other Forms of Market Imperfection
- L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
- L41 - Industrial Organization - - Antitrust Issues and Policies - - - Monopolization; Horizontal Anticompetitive Practices
This paper has been announced in the following NEP Reports:
- NEP-ALL-2009-11-27 (All new papers)
- NEP-COM-2009-11-27 (Industrial Competition)
- NEP-EXP-2009-11-27 (Experimental Economics)
- NEP-GTH-2009-11-27 (Game Theory)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Duffy, John & Ochs, Jack, 2009.
"Cooperative behavior and the frequency of social interaction,"
Games and Economic Behavior,
Elsevier, vol. 66(2), pages 785-812, July.
- John Duffy & Jack Ochs, 2004. "Cooperative Behavior and the Frequency of Social Interaction," Levine's Bibliography 122247000000000108, UCLA Department of Economics.
- John Duffy & Jack Ochs, 2004. "Cooperative Behavior and the Frequency of Social Interaction," Levine's Working Paper Archive 122247000000000060, David K. Levine.
- John Duffy & Jack Ochs, 2006. "Cooperative Behavior and the Frequency of Social Interaction," Working Papers 274, University of Pittsburgh, Department of Economics, revised Jul 2008.
- Urs Fischbacher, 2007. "z-Tree: Zurich toolbox for ready-made economic experiments," Experimental Economics, Springer, vol. 10(2), pages 171-178, June.
- Gabriele Camera & Marco Casari, 2009. "Cooperation among Strangers under the Shadow of the Future," American Economic Review, American Economic Association, vol. 99(3), pages 979-1005, June.
- David Masclet & Charles Noussair & Steven Tucker & Marie-Claire Villeval, 2001.
"Monetary and Non-Monetary Punishment in the Voluntary Contributions Mechanism,"
- David Masclet & Charles Noussair & Steven Tucker & Marie-Claire Villeval, 2003. "Monetary and Nonmonetary Punishment in the Voluntary Contributions Mechanism," American Economic Review, American Economic Association, vol. 93(1), pages 366-380, March.
- Masclet, D. & Noussair, C. & Tucker, S. & Villeval, M.C., 2001. "Monetary and Non-monetary Punishment in the Voluntary Contributions Mechanism," Purdue University Economics Working Papers 1141, Purdue University, Department of Economics.
- Noussair, C.N. & Masclet, D. & Tucker, S. & Villeval, M..C, 2003. "Monetary and non-monetary punishment in the voluntary contributions mechanism," Open Access publications from Tilburg University urn:nbn:nl:ui:12-377951, Tilburg University.
- David Masclet & Charles Noussair & Steven Tucker & Marie-Claire Villeval, 2003. "Monetary and non Monetary Punishment in the Voluntary Contributions Mechanism," Post-Print halshs-00175251, HAL.
- Erte Xiao & Daniel Houser, 2005. "Emotion expression in human punishment behavior," Experimental 0504003, EconWPA, revised 18 May 2005.
- Abrea Dilip & Pearce David & Stacchetti Ennio, 1993. "Renegotiation and Symmetry in Repeated Games," Journal of Economic Theory, Elsevier, vol. 60(2), pages 217-240, August.
- Charness, Gary B & Dufwenberg, Martin, 2008. "Broken Promises: An Experiment," University of California at Santa Barbara, Economics Working Paper Series qt6836m74q, Department of Economics, UC Santa Barbara.
- Timothy N Cason & Vai-Lam Mui, 2008. "Coordinating Collective Resistance Through Communication And Repeated Interaction," Monash Economics Working Papers 16/08, Monash University, Department of Economics.
- Andersson, Ola & Wengström, Erik, 2012.
"Credible communication and cooperation: Experimental evidence from multi-stage Games,"
Journal of Economic Behavior & Organization,
Elsevier, vol. 81(1), pages 207-219.
- Andersson, Ola & Wengström, Erik, 2011. "Credible Communication and Cooperation: Experimental Evidence from Multi-stage Games," Working Paper Series 883, Research Institute of Industrial Economics.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ().
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.