Thursday, July 21, 2016

Strategy Revision Opportunities and Collusion

Matthew Embrey (University of Sussex) ; Friederike Mengel (University of Essex and Maastricht University) and Ronald Peeters (Maastricht University) theorize Strategy Revision Opportunities and Collusion.

ABSTRACT: 

This paper studies whether and how strategy revision opportunities affect levels of collusion in indefinitely repeated two-player games. Consistent with standard theory, we find that such opportunities do not affect strategy choices, or collusion levels, if the game is of strategic substitutes. In contrast, there is a strong and positive effect for games of strategic complements. Revision opportunities lead to more collusion. The latter cannot be explained by renegotiation or standard risk-dominance considerations, but is consistent with a notion of fear of miscoordination based on minmax regret.

https://lawprofessors.typepad.com/antitrustprof_blog/2016/07/strategy-revision-opportunities-and-collusion.html

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