Pre-play communication in Cournot competition: An experiment with students and managers
AbstractThis study investigates the impact of pre-play communication on the outcomes in Cournot duopoly and triopoly experiments, using both students and managers as subjects. Communication is implemented by two different devices, a 'standardized-communication' and a free-communication device. We find that the effect of communication on collusion is larger in duopoly than in triopoly. Moreover, managers behave in a similar way under the two communication devices, while students are more influenced by the free-communication than by the standardized-communication device. In addition, managers select lower aggregate quantities than students, and communication enhances the difference between the subject pools in duopoly but reduces this difference in triopoly. Inspecting individual behavior, in all treatments the output adjustment is significantly correlated with the previous round's best response strategy. In the treatments with communication, the effect of imitation becomes larger and crowds out the effect of myopic best response. Finally, in all treatments duopoly results in more collusion than triopoly. --
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.
Bibliographic InfoPaper provided by Christian-Albrechts-University of Kiel, Department of Economics in its series Economics Working Papers with number 2010,09.
Date of creation: 2010
Date of revision:
artefactual field experiment; subject pools; Cournot oligopoly; managers; cheap talk;
Find related papers by JEL classification:
- L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
- C93 - Mathematical and Quantitative Methods - - Design of Experiments - - - Field Experiments
- C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
- D43 - Microeconomics - - Market Structure and Pricing - - - Oligopoly and Other Forms of Market Imperfection
- D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
This paper has been announced in the following NEP Reports:
- NEP-ALL-2010-11-20 (All new papers)
- NEP-COM-2010-11-20 (Industrial Competition)
- NEP-EXP-2010-11-20 (Experimental Economics)
- NEP-IND-2010-11-20 (Industrial Organization)
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.:
- Miguel Fonseca & Steffen Huck & Hans-Theo Normann, 2005. "Playing Cournot although they shouldn’t," Economic Theory, Springer, vol. 25(3), pages 669-677, 04.
- Waichman Israel & Requate Till & Siang Ch'ng Kean, 2010. "A Cournot Experiment with Managers and Students: Evidence from Germany and Malaysia," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 10(1), pages 1-17, April.
- Huck, Steffen & Müller, Wieland & Normann, Hans-Theo, 1999.
"Stackelberg beats Cournot: On collusion and efficiency in experimental markets,"
SFB 373 Discussion Papers
1999,32, Humboldt University of Berlin, Interdisciplinary Research Project 373: Quantification and Simulation of Economic Processes.
- Huck, Steffen & Muller, Wieland & Normann, Hans-Theo, 2001. "Stackelberg Beats Cournot: On Collusion and Efficiency in Experimental Markets," Economic Journal, Royal Economic Society, vol. 111(474), pages 749-65, October.
- Fernando Vega Redondo, 1996.
"The evolution of walrasian behavior,"
Working Papers. Serie AD
1996-05, Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie).
- Steffen Huck & Hans-Theo Normann & Joerg Oechssler, 1997.
"Learning in Cournot Oligopoly - An Experiment,"
Game Theory and Information
9707009, EconWPA, revised 22 Jul 1997.
- Cooper David J, 2006. "Are Experienced Managers Experts at Overcoming Coordination Failure?," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 5(2), pages 1-52, May.
- David J. Cooper, 1999. "Gaming against Managers in Incentive Systems: Experimental Results with Chinese Students and Chinese Managers," American Economic Review, American Economic Association, vol. 89(4), pages 781-804, September.
- Ernst Fehr & John List, 2004.
"The hidden costs and returns of incentives - trust and trustworthiness among ceos,"
Artefactual Field Experiments
00044, The Field Experiments Website.
- Ernst Fehr & John A. List, 2004. "The Hidden Costs and Returns of Incentives-Trust and Trustworthiness Among CEOs," Journal of the European Economic Association, MIT Press, vol. 2(5), pages 743-771, 09.
- Ernst Fehr & John A. List, 2004. "THE HIDDEN COSTS AND RETURNS OF INCENTIVES — TRUST AND TRUSTWORTHINESS AMONG CEOs," Labor and Demography 0409012, EconWPA.
- E. Fehr & John A. List, . "The Hidden Costs and Returns of Incentives - Trust and Trustworthiness among CEOs," IEW - Working Papers 134, Institute for Empirical Research in Economics - University of Zurich.
- José Apesteguia & Martin Dufwenberg & Reinhard Selten, 2003.
"Blowing the Whistle,"
Bonn Econ Discussion Papers
bgse9_2003, University of Bonn, Germany.
- Apesteguia, Jose & Dufwenberg, Martin & Selten, Reinhard, 2003. "Blowing the Whistle," Research Papers in Economics 2003:5, Stockholm University, Department of Economics.
- José Apesteguía & Martin Dufwenberg & Reinhard Selten, 2003. "Blowing the Whistle," Documentos de Trabajo - Lan Gaiak Departamento de EconomÃa - Universidad PÃºblica de Navarra 0303, Departamento de Economía - Universidad Pública de Navarra, revised 2003.
- Isaac, R. Mark & Walker, James M., 1985. "Information and conspiracy in sealed bid auctions," Journal of Economic Behavior & Organization, Elsevier, vol. 6(2), pages 139-159, June.
- Francisco Alpízar & Till Requate & Albert Schram, 2004. "Collective versus Random Fining: An Experimental Study on Controlling Ambient Pollution," Environmental & Resource Economics, European Association of Environmental and Resource Economists, vol. 29(2), pages 231-252, October.
- Daniel Balliet, 2010. "Communication and Cooperation in Social Dilemmas: A Meta-Analytic Review," Journal of Conflict Resolution, Peace Science Society (International), vol. 54(1), pages 39-57, February.
- Huck, Steffen & Normann, Hans-Theo & Oechssler, Jorg, 2004.
"Two are few and four are many: number effects in experimental oligopolies,"
Journal of Economic Behavior & Organization,
Elsevier, vol. 53(4), pages 435-446, April.
- Steffen Huck & Hans-Theo Normann & Jörg Oechssler, 2001. "Two are Few and Four are Many: Number Effects in Experimental Oligopolies," Bonn Econ Discussion Papers bgse12_2001, University of Bonn, Germany.
- Isaac, R. Mark & Plott, Charles R., 1981.
"The opportunity for conspiracy in restraint of trade : An experimental study,"
Journal of Economic Behavior & Organization,
Elsevier, vol. 2(1), pages 1-30, March.
- Isaac, R. Mark & Plott, Charles R., . "The Opportunity for Conspiracy in Restraint of Trade: An Experimental Study," Working Papers 255, California Institute of Technology, Division of the Humanities and Social Sciences.
- Holcomb, James H. & Nelson, Paul S., 1997. "The role of monitoring in duopoly market outcomes," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 26(1), pages 79-93.
- Ola Andersson & Erik Wengström, 2007.
"Do Antitrust Laws Facilitate Collusion? Experimental Evidence on Costly Communication in Duopolies,"
Scandinavian Journal of Economics,
Wiley Blackwell, vol. 109(2), pages 321-339, 06.
- Andersson, Ola & Wengström, Erik, 2004. "Do Antitrust Laws Facilitate Collusion? Experimental Evidence on Costly Communication in Duopolies," Working Papers 2004:14, Lund University, Department of Economics, revised 13 Sep 2004.
- Jeroen Hinloopen & Adriaan R. Soetevent, 2008. "Laboratory evidence on the effectiveness of corporate leniency programs," RAND Journal of Economics, RAND Corporation, vol. 39(2), pages 607-616.
- Steffen Huck & Hans-Theo Normann & Joerg Oechssler, 1998.
"Does information about competitors' actions increase or decrease competition in experimental oligopoly markets?,"
- Huck, Steffen & Normann, Hans-Theo & Oechssler, Jorg, 2000. "Does information about competitors' actions increase or decrease competition in experimental oligopoly markets?," International Journal of Industrial Organization, Elsevier, vol. 18(1), pages 39-57, January.
- Daughety, Andrew F & Forsythe, Robert, 1987. "The Effects of Industry-Wide Price Regulation on Industrial Organization," Journal of Law, Economics and Organization, Oxford University Press, vol. 3(2), pages 397-434, Fall.
- Carlo Altavilla & Luigi Luini & Patrizia Sbriglia, 2005.
"Social Learning in Market Games,"
Labsi Experimental Economics Laboratory University of Siena
003, University of Siena.
- Mason, Charles F. & Phillips, Owen R. & Redington, Douglas B., 1991. "The role of gender in a non-cooperative game," Journal of Economic Behavior & Organization, Elsevier, vol. 15(2), pages 215-235, March.
- James W. Friedman, 1965. "An Experimental Study of Cooperative Duopoly," Cowles Foundation Discussion Papers 192, Cowles Foundation for Research in Economics, Yale University.
- Bryant, Peter G & Eckard, E Woodrow, Jr, 1991. "Price Fixing: The Probability of Getting Caught," The Review of Economics and Statistics, MIT Press, vol. 73(3), pages 531-36, August.
- Urs Fischbacher, 2007. "z-Tree: Zurich toolbox for ready-made economic experiments," Experimental Economics, Springer, vol. 10(2), pages 171-178, June.
- Brown-Kruse, Jamie & Cronshaw, Mark B & Schenk, David J, 1993. "Theory and Experiments on Spatial Competition," Economic Inquiry, Western Economic Association International, vol. 31(1), pages 139-65, January.
- Cason, Timothy N., 1995. "Cheap talk price signaling in laboratory markets," Information Economics and Policy, Elsevier, vol. 7(2), pages 183-204, June.
- Crawford, Vincent, 1998. "A Survey of Experiments on Communication via Cheap Talk," Journal of Economic Theory, Elsevier, vol. 78(2), pages 286-298, February.
- 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).
- Fonseca, Miguel A. & Normann, Hans-Theo, 2012. "Explicit vs. tacit collusion—The impact of communication in oligopoly experiments," European Economic Review, Elsevier, vol. 56(8), pages 1759-1772.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (ZBW - German National Library of Economics).
If references are entirely missing, you can add them using this form.