The Impact of Cheap Talk on Supply Chain Performance in Case of Asymmetric Information: An Experimental Investigation

Karl Inderfurth (), Abdolkarim Sadrieh and Guido Voigt ()
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Karl Inderfurth: Faculty of Economics and Management, Otto-von-Guericke University Magdeburg

No 8001, FEMM Working Papers from Otto-von-Guericke University Magdeburg, Faculty of Economics and Management

Abstract: The use of screening contracts is a common approach to solve supply chain coordination problems under asymmetric information. One major assumption in this context is that subjects will rather use their private information strategically than to reveal them truthfully, if they do not get any incentives to do this. This harms supply chain performance. This paper investigates the influence of costless pre-game communication (i.e. communication without any direct incentives) between a supplier and a buyer in a lotsizing framework. A laboratory experiment was conducted to test, whether this costless pre-game communication has (in contradiction to standard game-theory) an influence on supply chain coordination.

Keywords: experimental economics; screening contracts; supply chain coordination (search for similar items in EconPapers)
JEL-codes: C92 M11 (search for similar items in EconPapers)
Pages: 42 pages
Date: 2008-01
New Economics Papers: this item is included in nep-exp
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Citations: View citations in EconPapers (1)

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