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The effects of group composition in a strategic environment: Evidence from a field experiment

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  • List, John A.
  • Neilson, William S.
  • Price, Michael K.

Abstract

Recent theoretical and empirical studies have explored the effect of group membership and identity on individual decision-making. This line of research highlights that economic models focusing on the individual as the sole entity in the decision-making environment potentially miss critical features. This study takes this literature in a new direction by overlaying a field experiment onto a setting where groups have arisen naturally. Our experimental laboratory is large open air markets, where we are able to examine the effects of group membership on seller׳s collusive behavior as measured by prices and surplus allocations. This permits us to explore strategic implications of group composition. Empirical results illustrate the importance of group composition on pricing decisions, and show that deviations from Nash equilibrium are crucially related to group membership.

Suggested Citation

  • List, John A. & Neilson, William S. & Price, Michael K., 2016. "The effects of group composition in a strategic environment: Evidence from a field experiment," European Economic Review, Elsevier, vol. 90(C), pages 67-85.
  • Handle: RePEc:eee:eecrev:v:90:y:2016:i:c:p:67-85
    DOI: 10.1016/j.euroecorev.2016.02.019
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    More about this item

    Keywords

    Field experiments; Group identity; Cooperation;

    JEL classification:

    • C93 - Mathematical and Quantitative Methods - - Design of Experiments - - - Field Experiments
    • D03 - Microeconomics - - General - - - Behavioral Microeconomics: Underlying Principles
    • Z13 - Other Special Topics - - Cultural Economics - - - Economic Sociology; Economic Anthropology; Language; Social and Economic Stratification

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