Next Article in Journal
Hierarchical Bayesian Analysis of Biased Beliefs and Distributional Other-Regarding Preferences
Previous Article in Journal
Nash Implementation in an Allocation Problem with Single-Dipped Preferences
Open AccessArticle

Tacit Collusion under Fairness and Reciprocity

1
Sogang University, School of Economics, 35 Baekbeom-ro, Seoul, South Korea
2
University of Lausanne, Faculty of Business and Economics, Internef, 535 CH-1015, Lausanne, Switzerland
*
Author to whom correspondence should be addressed.
Games 2013, 4(1), 50-65; https://doi.org/10.3390/g4010050
Received: 25 September 2012 / Revised: 28 January 2013 / Accepted: 29 January 2013 / Published: 7 February 2013
This paper departs from the standard profit-maximizing model of firm behavior by assuming that firms are motivated in part by personal animosity–or respect–towards their competitors. A reciprocal firm responds to unkind behavior of rivals with unkind actions (negative reciprocity), while at the same time, it responds to kind behavior of rivals with kind actions (positive reciprocity). We find that collusion is easier to sustain when firms have a concern for reciprocity towards competing firms provided that they consider collusive prices to be kind and punishment prices to be unkind. Thus, reciprocity concerns among firms can have adverse welfare consequences for consumers. View Full-Text
Keywords: fairness; reciprocity; collusion; repeated games fairness; reciprocity; collusion; repeated games
MDPI and ACS Style

İriş, D.; Santos-Pinto, L. Tacit Collusion under Fairness and Reciprocity. Games 2013, 4, 50-65.

Show more citation formats Show less citations formats

Article Access Map by Country/Region

1
Only visits after 24 November 2015 are recorded.
Back to TopTop