Douglas D. Davis () (Department of Economics, VCU School of Business) Korenok Oleg () (Department of Economics, VCU School of Business) Robert Reilly () (Department of Economics, VCU School of Business)
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This paper studies the effects of price signaling and underlying propensities to cooperate on tacit collusion in laboratory posted offer markets. The experiment consists of two stages. The first stage introduces a forecasting treatment that allows a refined assessment of signaling activity. We also use first stage results to classify subjects by cooperative ‘type’. The second stage repeats the first stage design, but in markets comprised of homogeneously ‘competitive’ or ‘cooperative’ players. Results indicate that signaling elicits immediate responses, but does not affect overall price levels. ‘Types’ however, are stable across sessions and affect price levels substantially.
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Paper provided by VCU School of Business, Department of Economics in its series Working Papers with number
0702.