We explore the difference between explicit and tacit collusion by investigating the impact communication has in experimental markets. For Bertrand oligopolies with various numbers of firms, we compare pricing behavior with and without the possibility to communicate among firms. We find strong...

In a Bertrand-oligopoly experiment, firms choose whether or not to engage in cartel-like communication and, if so, they may get fined by a cartel authority. We find that the four-firm industries form cartels more often than the duopolies because they gain less from a hysteresis effect after...

We study the voluntary revelation of private information in a labor-market experiment where workers can reveal their productivity at a cost. While rational revelation improves a worker's payoff, it imposes a negative externality on others and may trigger further revelation. Such unraveling can...

Broken windows: the metaphor has changed New York and Los Angeles. Yet it is far from undisputed whether the broken windows policy was causal for reducing crime. The scope of the theory is not confined to crime. The theory claims that crime is inextricably linked to social order more generally....

We report on an experiment designed to compare Stackelberg and Cournot duopoly markets with quantity competition. We implement both a random matching and a fixed-pairs version for each market. Stackelberg markets yield, regardless of the matching scheme, higher outputs than Cournot markets and,...

In this article we study a very simple trial and error learning process in the context of a Cournot oligopoly. Without any knowledge of the payoff functions players increase, respectively decrease, their quantity as long as this leads to higher profits. We show that despite the absence of any...

We report the results of experiments designed to test recent theories of vertical foreclosure. Consistent with the theory, vertical integration improves the upstream firm's ability to commit to restricting output to the monopoly level, as does the use of public contracts. Public contracts are...

This experiment was designed to test various learning theories in the context of a Cournot oligopoly. We derive theoretical predictions for the learning theories and test these predictions by varying the information given to subjects. The results show that some subjects imitate successful...

We analyze a durable-goods monopoly selling a single unit of a good to a buyer whose value of the good is private information. The discount factors of the buyer and the seller may differ and are also privately known. We derive the closed-form solution of a two-period game and compare it to the...