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Is there no “I” in “Team”? Interindividual-intergroup discontinuity effect in a Cournot competition experiment

Israel Waichman () and Korbinian von Blanckenburg

Journal of Economic Psychology, 2020, vol. 77, issue C

Abstract: Even though firms consist of teams of individuals, industrial organization experiments are typically conducted under the unitary player assumption with individuals representing firms. Against this practice, there is evidence that individuals’ decisions differ from those made by teams, and also from individuals’ decisions which affect both oneself and others. This study examines the empirical scope of the unitary player assumption (alternatively the “interindividual-intergroup discontinuity effect”) in the context of a Cournot competition experiment. In the first, standard, experiment (216 participants), we find no evidence for the discontinuity effect. Output choices of both individuals and teams are around the Cournot outcome. In a second experiment (198 participants), we use a recommendation to shift participants’ initial disposition towards the (off-equilibrium) collusive output. This triggers the discontinuity effect; individuals choose lower outputs and collude more than teams. This effect is persistent in the second half of the experiment, and is not caused by team-member discussion or by seating team members together. We discuss the interpretations and implications of our results.

Keywords: Decisions-for-others; Discontinuity effect; Unitary player assumption; Cournot oligopoly; Communication; Recommended play; Experimenter demand effect; Experiment (search for similar items in EconPapers)
JEL-codes: C92 D43 D91 L13 (search for similar items in EconPapers)
Date: 2020
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DOI: 10.1016/j.joep.2019.06.004

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