Pre-play communication in Cournot competition: An experiment with students and managers

Israel Waichman (), Till Requate () and Ch'ng Kean Siang

No 2010-09, Economics Working Papers from Christian-Albrechts-University of Kiel, Department of Economics

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.

Keywords: artefactual field experiment; subject pools; Cournot oligopoly; managers; cheap talk (search for similar items in EconPapers)
JEL-codes: C72 C93 D21 D43 L13 (search for similar items in EconPapers)
Date: 2010
New Economics Papers: this item is included in nep-com, nep-exp and nep-ind
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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Persistent link: https://EconPapers.repec.org/RePEc:zbw:cauewp:201009

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