Is a "firm" a firm? A Stackelberg experiment

Andreas Hildenbrand

No 2012-53, Economics Discussion Papers from 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.

Keywords: industrial organization; Stackelberg game; individual behaviour; team behaviour; framing; experimental economics (search for similar items in EconPapers)
JEL-codes: C72 C91 C92 D43 L13 (search for similar items in EconPapers)
Date: 2012
New Economics Papers: this item is included in nep-bec, nep-com, nep-exp and nep-ind
References: View references in EconPapers View complete reference list from CitEc
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http://www.economics-ejournal.org/economics/discussionpapers/2012-53
https://www.econstor.eu/bitstream/10419/64824/1/727377787.pdf (application/pdf)

Related works:
Journal Article: Is a firm a firm? A Stackelberg experiment (2013)
Working Paper: Is a “Firm” a Firm? A Stackelberg Experiment (2012)
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:ifwedp:201253

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