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Title:Pre-play communication in Cournot competition: An experiment with students and managers PDF Logo
Authors:Waichman, Israel
Requate, Till
Siang, Ch'ng Kean
Issue Date:2010
Series/Report no.:Economics working paper / Christian-Albrechts-Universität Kiel, Department of Economics 2010,09
Abstract:This 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.
Subjects:artefactual field experiment
subject pools
Cournot oligopoly
managers
cheap talk
JEL:L13
C93
C72
D43
D21
Document Type:Working Paper
Appears in Collections:Economics Working Papers, Department of Economics, CAU Kiel

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