Does R&D Cooperation Facilitate Price Collusion? An Experiment

In the paper the impact of R&D cooperation on prices in experimental duopoly markets is examined.As a theoretical benchmark for the experiment, a two-stage duopoly model with an R&D stage with technological spillovers and a pricing stage is used.For two scenarios of technological spillovers (no versus complete spillovers), a treat-ment where it is possible to credibly commit to an R&D contract and a baseline treatment without binding contract possibilities, are run.Findings are that, in general, prices are between the subgame perfect Nash and the cooperative level.Further, for both spillover levels prices are higher in periods where R&D contracts are committed to, than in other periods, and to a lesser extent compared to the baseline treatments.R&D;cooperation;duopoly;prices;spillovers

Revisiting Strategic versus Non-strategic Cooperation

We use a novel experimental design to disentangle strategically- and non-strategically-motivated cooperation. By using contingent responses in a repeated sequential prisoners’ dilemma with a known probabilistic end, we differentiate end-game behavior from continuation behavior within individuals while controlling for expectations. This design allows us to determine the extent to which strategically-cooperating individuals are responsible for the so-called endgame effect. Experiments with two different subject pools indicate that the most common motive for cooperation in repeated games is strategic and that the extent to which endgame effects are driven by strategically-cooperating individuals depends on the profitability of cooperation.reputation building;strong reciprocity;conditional cooperation;strategic cooperation

Conditional Cooperation: Disentangling Strategic from Non-Strategic Motivations

We use a novel experimental design to examine the role of reputational concerns in explaining conditional cooperation in social dilemmas. By using the strategy method in a repeated sequential prisoners’ dilemma in which the probabilistic end is known, we can distinguish between strategically and non-strategically motivated cooperation. Second movers who are strong reciprocators ought to conditionally cooperate with first movers irrespective of whether the game continues or not. In contrast, strategically motivated second movers conditionally cooperate only if the game continues and they otherwise defect. Experimental results, with two different subject pools, indicate reputation building is used around 30% of the time, which accounts for between 50% and 75% of all realized cooperative actions. The percentage of strong reciprocators varied between 6% to 23%.cooperation;reputation building;strong reciprocity;repeated prisoners’ dilemma

Ignorance is not always Bliss: Feedback and Dynamics in Public Good Experiments

In this paper we study the effects of providing additional feedback about individual contributions and earnings on the dynamics of contributions in a repeated public good game. We include treatments where subjects can freely choose whether to obtain additional information about individual contributions or individual earnings. We find that, in the aggregate, contributions decline less fast when additional information about contributions and earnings is provided on top of aggregate information. We also find that there exist substantial but intuitively appealing differences in the way individuals react to feedback. Particularly, individuals with a high propensity to contribute tend to imitate the highest contributor more often and are more inclined to obtain feedback about individual contributions than about individual earnings than individuals with a lower propensity to contribute.voluntary contributions;experiment;repeated interaction;feedback;imitation

The Gambler's Fallacy and Gender

The “gambler’s fallacy” is the false belief that a random event is less likely to occur if the event has occurred recently. Such beliefs are false if the onset of events is in fact independent of previous events. We study gender differences in the gambler’s fallacy using data from the Danish state lottery. Our data set is unique in that we track individual players over time which allows us to investigate how men and women react with their number picking to outcomes of recent lotto drawings. We find evidence of gambler’s fallacy for men but not for women. On average, men are about 1% less likely to bet on numbers drawn in the previous week than on numbers not drawn. Women do not react significantly to the previous week’s drawing outcome.lottery gambling;gender;gambler’s fallacy

Predicting Lotto Numbers

We investigate the "law of small numbers" using a unique panel data set on lotto gambling. Because we can track individual players over time, we can measure how they react to outcomes of recent lotto drawings. We can therefore test whether they behave as if they believe they can predict lotto numbers based on recent drawings. While most players pick the same set of number week after week without regards of numbers drawn or anything else, we find that those who do change, act on average in the way predicted by the law of small numbers as formalized in recent behavioral theory. In particular, on average they move away from numbers that are on streak, i.e. have been drawn several weeks in a row, consistent with the "hot hand fallacy".gambler's fallacy;hot hand fallacy;representativeness;law of small numbers

Naked Exclusion: Towards a Behavioral Approach to Exclusive Dealing

We report experimental results on exclusive dealing inspired by the literature on "naked exclusion". Our key findings are: First, exclusion of a more efficient entrant is a widespread phenomenon in lab markets. Second, allowing incumbents to discriminate between buyers increases exclusion rates compared to the non-discriminatory case only when payments to buyers can be offered sequentially and secretly. Third, allowing discrimination does not lead to significant decreases in costs of exclusion. Accounting for the observation that buyers are more likely to accept an exclusive deal the higher is the payment, substantially improves the fit between theoretical predictions and observed behavior.exclusive dealing;entry deterrence;foreclosure;contracts;externalities;coordination;experiments