The Impact of Cheap Talk on Supply Chain Performance in Case of Asymmetric Information: An Experimental Investigation
AbstractThe use of screening contracts is a common approach to solve supply chain coordination problems under asymmetric information. One major assumption in this context is that subjects will rather use their private information strategically than to reveal them truthfully, if they do not get any incentives to do this. This harms supply chain performance. This paper investigates the influence of costless pre-game communication (i.e. communication without any direct incentives) between a supplier and a buyer in a lotsizing framework. A laboratory experiment was conducted to test, whether this costless pre-game communication has (in contradiction to standard game-theory) an influence on supply chain coordination.
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Bibliographic InfoPaper provided by Otto-von-Guericke University Magdeburg, Faculty of Economics and Management in its series FEMM Working Papers with number 08001.
Length: 42 pages
Date of creation: Jan 2008
Date of revision:
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experimental economics; screening contracts; supply chain coordination;
Find related papers by JEL classification:
- M11 - Business Administration and Business Economics; Marketing; Accounting - - Business Administration - - - Production Management
- C92 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Group Behavior
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