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

  • Embrey Matthew
  • Mengel Friederike
  • Peeters Ronald

    (METEOR)

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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File URL: http://digitalarchive.maastrichtuniversity.nl/fedora/objects/guid:b0d039a4-2bbc-445d-8a5c-a9e201f5c150/datastreams/ASSET1/content
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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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  1. Farrell, Joseph & Maskin, Eric, 1989. "Renegotiation in repeated games," Games and Economic Behavior, Elsevier, vol. 1(4), pages 327-360, December.
  2. 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.
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  8. Huck, S. & Müller, W. & Normann, H.T., 2002. "To commit or not to commit : Endogenous timing in experimental duopoly markets," Other publications TiSEM 52f12df4-ce93-42ae-b8f4-5, Tilburg University, School of Economics and Management.
  9. Aramendia, Miguel & Larrea, Concepcion & Ruiz, Luis, 2005. "Renegotiation in the repeated Cournot model," Games and Economic Behavior, Elsevier, vol. 52(1), pages 1-19, July.
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  11. Andersson, Ola & Wengström, Erik, 2011. "Credible Communication and Cooperation: Experimental Evidence from Multi-stage Games," Working Paper Series 883, Research Institute of Industrial Economics.
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