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Strategic commitment and cooperation in experimental games of strategic complements and substitutes

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  • Embrey Matthew
  • Mengel Friederike
  • Peeters Ronald

    (METEOR)

Abstract

We study the impact of strategic commitment on cooperation in indefinitely repeated games ofstrategic substitutes (Cournot) and complements (Bertrand) using laboratory experiments. Overall,strategic commitment has no effect on cooperation with strategic substitutes and a negative onewith strategic complements. In the absence of strong strategic commitment, we find morecooperation in the complements game than in the substitutes game. However, when subjects are morecommitted to initial plans, a higher level of cooperation is achieved with strategic substitutes.These results cannot be explained by standard risk-dominance or renegotiation considerations, butare consistent with a notion of fear of miscoordination based on minmax regret.

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Bibliographic Info

Paper provided by Maastricht University, Maastricht Research School of Economics of Technology and Organization (METEOR) in its series Research Memorandum with number 052.

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Date of creation: 2012
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Handle: RePEc:unm:umamet:2012052

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Keywords: microeconomics ;

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  1. Farrell, Joseph & Maskin, Eric, 1987. "Renegotiation in Repeated Games," Department of Economics, Working Paper Series, Department of Economics, Institute for Business and Economic Research, UC Berkeley qt9wv3h5jb, Department of Economics, Institute for Business and Economic Research, UC Berkeley.
  2. Mengel, Friederike & Peeters, Ronald, 2011. "Strategic behavior in repeated voluntary contribution experiments," Journal of Public Economics, Elsevier, Elsevier, vol. 95(1), pages 143-148.
  3. Steffen Huck & Wieland Müller & Hans-Theo Normann, 1999. "To commit or not to commit: Endogenous timing in experimental duopoly markets," Experimental, EconWPA 9906002, EconWPA.
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  7. Dirk Bergemann & Karl H Schlag, 2007. "Pricing without Priors," Levine's Bibliography 122247000000001557, UCLA Department of Economics.
  8. Bulow, Jeremy I & Geanakoplos, John D & Klemperer, Paul D, 1985. "Multimarket Oligopoly: Strategic Substitutes and Complements," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 93(3), pages 488-511, June.
  9. Sylvain Chassang, 2010. "Fear of Miscoordination and the Robustness of Cooperation in Dynamic Global Games With Exit," Econometrica, Econometric Society, Econometric Society, vol. 78(3), pages 973-1006, 05.
  10. Andersson, Ola & Wengström, Erik, 2011. "Credible Communication and Cooperation: Experimental Evidence from Multi-stage Games," Working Paper Series, Research Institute of Industrial Economics 883, Research Institute of Industrial Economics.
  11. Matthias Blonski & Peter Ockenfels & Giancarlo Spagnolo, 2011. "Equilibrium Selection in the Repeated Prisoner's Dilemma: Axiomatic Approach and Experimental Evidence," American Economic Journal: Microeconomics, American Economic Association, American Economic Association, vol. 3(3), pages 164-92, August.
  12. Jan Potters & Sigrid Suetens, 2009. "Cooperation in Experimental Games of Strategic Complements and Substitutes," Review of Economic Studies, Oxford University Press, vol. 76(3), pages 1125-1147.
  13. Greiner, Ben, 2004. "An Online Recruitment System for Economic Experiments," MPRA Paper 13513, University Library of Munich, Germany.
  14. Fonseca, Miguel A. & Normann, Hans-Theo, 2012. "Explicit vs. tacit collusion: The impact of communication in oligopoly experiments," DICE Discussion Papers 65, Heinrich‐Heine‐Universität Düsseldorf, Düsseldorf Institute for Competition Economics (DICE).
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