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| Title: | | Is a "firm" a firm? A Stackelberg experiment  |
| Authors: | | Hildenbrand, Andreas |
| Issue Date: | | 2012 |
| Series/Report no.: | | Economics Discussion Papers 2012-53 |
| Abstract: | | Industrial organization is mainly concerned with the behavior of large firms, especially when it comes to oligopoly theory. Experimental industrial organization therefore faces a problem: How can firms be brought into the laboratory? The main approach relies on framing: Call individuals firms! This experimental approach is not in line with modern industrial organization, according to which a firm's market behavior is also determined by its organizational structure. In this paper, a Stackelberg experiment is considered in order to answer the question whether framing individual decision making as organizational decision making or implementing an organizational structure is more effective in generating profit-maximizing behavior. Firms are either represented by individuals or by teams. Teams are organized according to Alchian and Demsetz's (1972) contractual view of the firm. I find that teams' quantity choices are more in line with the assumption of profit maximization than individuals' choices. Compared to individuals, teams appear to be less inequality averse. |
| Subjects: | | industrial organization Stackelberg game individual behaviour team behaviour framing experimental economics |
| JEL: | | C72 C91 C92 D43 L13 |
| Creative Commons License: | |  |
| Document Type: | | Working Paper |
| Appears in Collections: | | Economics: The Open-Access, Open-Assessment E-Journal - Discussion Papers
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