Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/64824 
Year of Publication: 
2012
Series/Report no.: 
Economics Discussion Papers No. 2012-53
Publisher: 
Kiel Institute for the World Economy (IfW), Kiel
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: 
cc-by-nc Logo
Document Type: 
Working Paper

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