{"title":"How much you talk matters: cheap talk and collusion in a Bertrand oligopoly game","authors":"Jun Yeong Lee, Elizabeth Hoffman","doi":"10.1007/s11238-024-10001-3","DOIUrl":null,"url":null,"abstract":"<p>This study investigates the impact of cheap talk on price and participant profits using a repeated Bertrand oligopoly experiment. During the first 10 rounds, participants are not allowed to communicate with each other. Twenty additional rounds are then played in which the participants can text with one another using an instant message system. Some groups are allowed to text before every round, some before every other round, some every third round, some every fourth round, and others only every fifth round. On average, when texting is allowed, groups attempt to collude to raise the price after being allowed to text. In summary, success in collusion with cheap talk is correlated with a combination of how often participants can text, the subject of their texts, and whether participants actually text when they can.</p>","PeriodicalId":47535,"journal":{"name":"Theory and Decision","volume":null,"pages":null},"PeriodicalIF":0.9000,"publicationDate":"2024-08-31","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":"0","resultStr":null,"platform":"Semanticscholar","paperid":null,"PeriodicalName":"Theory and Decision","FirstCategoryId":"96","ListUrlMain":"https://doi.org/10.1007/s11238-024-10001-3","RegionNum":4,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":null,"EPubDate":"","PubModel":"","JCR":"Q3","JCRName":"ECONOMICS","Score":null,"Total":0}
引用次数: 0
Abstract
This study investigates the impact of cheap talk on price and participant profits using a repeated Bertrand oligopoly experiment. During the first 10 rounds, participants are not allowed to communicate with each other. Twenty additional rounds are then played in which the participants can text with one another using an instant message system. Some groups are allowed to text before every round, some before every other round, some every third round, some every fourth round, and others only every fifth round. On average, when texting is allowed, groups attempt to collude to raise the price after being allowed to text. In summary, success in collusion with cheap talk is correlated with a combination of how often participants can text, the subject of their texts, and whether participants actually text when they can.
期刊介绍：
The field of decision has been investigated from many sides. However, research programs relevant to decision making in psychology, management science, economics, the theory of games, statistics, operations research, artificial intelligence, cognitive science and analytical philosophy have remained separate. Theory and Decision is devoted to all aspects of decision making belonging to such programs, but addresses also possible cross-fertilizations between these disciplines which would represent effective advances in knowledge. The purpose of the journal is to let the engineering of choice gradually emerge both for individual and for collective decision making. Formalized treatments will be favoured, to the extent that they provide new insights into the issues raised and an appropriate modeling of the situation considered. Due to its growing importance, expermentation in decision making as well as its links to the cognitive sciences will be granted special attention by Theory and Decision.
Of particular interest are: Preference and belief modeling,
Experimental decision making under risk or under uncertainty,
Decision analysis, multicriteria decision modeling,
Game theory, negotiation theory, collective decision making, social choice,
Rationality, cognitive processes and interactive decision making,
Methodology of the decision sciences. Applications to various problems in management and organization science, economics and finance, computer-supported decision schemes, will be welcome as long as they bear on sufficiently general cases. Analysis of actual decision making processes are also relevant topics for the journal, whether pertaining to individual, collective or negotiatory approaches; to private decisions or public policies; to operations or to strategic choices.
Officially cited as: Theory Decis
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