TY - RPRT A1 - Andres, Maximilian A1 - Bruttel, Lisa T1 - Communicating Cartel Intentions T2 - CEPA Discussion Papers N2 - While the economic harm of cartels is caused by their price-increasing effect, sanctioning by courts rather targets at the underlying process of firms reaching a price-fixing agreement. This paper provides experimental evidence on the question whether such sanctioning meets the economic target, i.e., whether evidence of a collusive meeting of the firms and of the content of their communication reliably predicts subsequent prices. We find that already the mere mutual agreement to meet predicts a strong increase in prices. Conversely, express distancing from communication completely nullifies its otherwise price-increasing effect. Using machine learning, we show that communication only increases prices if it is very explicit about how the cartel plans to behave. T3 - CEPA Discussion Papers - 77 KW - cartel KW - collusion KW - communication KW - machine learning KW - experiment Y1 - 2024 U6 - http://nbn-resolving.de/urn/resolver.pl?urn:nbn:de:kobv:517-opus4-638469 SN - 2628-653X IS - 77 ER - TY - JOUR A1 - Andres, Maximilian A1 - Bruttel, Lisa A1 - Friedrichsen, Jana T1 - The leniency rule revisited BT - experiments on cartel formation with open communication JF - International journal of industrial organization N2 - The experimental literature on antitrust enforcement provides robust evidence that communication plays an important role for the formation and stability of cartels. We extend these studies through a design that distinguishes between innocuous communication and communication about a cartel, sanctioning only the latter. To this aim, we introduce a participant in the role of the competition authority, who is properly incentivized to judge the communication content and price setting behavior of the firms. Using this novel design, we revisit the question whether a leniency rule successfully destabilizes cartels. In contrast to existing experimental studies, we find that a leniency rule does not affect cartelization. We discuss potential explanations for this contrasting result. KW - cartel KW - judgment of communication KW - corporate leniency program KW - price competition KW - experiment Y1 - 2021 U6 - https://doi.org/10.1016/j.ijindorg.2021.102728 SN - 0167-7187 VL - 76 PB - Elsevier CY - Amsterdam ER - TY - JOUR A1 - Andres, Maximilian A1 - Bruttel, Lisa A1 - Friedrichsen, Jana T1 - How communication makes the difference between a cartel and tacit collusion BT - a machine learning approach JF - European economic review N2 - This paper sheds new light on the role of communication for cartel formation. Using machine learning to evaluate free-form chat communication among firms in a laboratory experiment, we identify typical communication patterns for both explicit cartel formation and indirect attempts to collude tacitly. We document that firms are less likely to communicate explicitly about price fixing and more likely to use indirect messages when sanctioning institutions are present. This effect of sanctions on communication reinforces the direct cartel-deterring effect of sanctions as collusion is more difficult to reach and sustain without an explicit agreement. Indirect messages have no, or even a negative, effect on prices. KW - cartel KW - collusion KW - communication KW - machine learning KW - experiment Y1 - 2023 U6 - https://doi.org/10.1016/j.euroecorev.2022.104331 SN - 0014-2921 SN - 1873-572X VL - 152 SP - 1 EP - 18 PB - Elsevier CY - Amsterdam ER - TY - RPRT A1 - Andres, Maximilian A1 - Bruttel, Lisa Verena A1 - Friedrichsen, Jana T1 - The Leniency Rule Revisited: Experiments on Cartel Formation with Open Communication T2 - CEPA Discussion Papers N2 - The experimental literature on antitrust enforcement provides robust evidence that communication plays an important role for the formation and stability of cartels. We extend these studies through a design that distinguishes between innocuous communication and communication about a cartel, sanctioning only the latter. To this aim, we introduce a participant in the role of the competition authority, who is properly incentivized to judge communication content and price setting behavior of the firms. Using this novel design, we revisit the question whether a leniency rule successfully destabilizes cartels. In contrast to existing experimental studies, we find that a leniency rule does not affect cartelization. We discuss potential explanations for this contrasting result. T3 - CEPA Discussion Papers - 24 KW - cartel KW - judgment of communication KW - corporate leniency program KW - price competition KW - experiment Y1 - 2021 U6 - http://nbn-resolving.de/urn/resolver.pl?urn:nbn:de:kobv:517-opus4-491696 SN - 2628-653X N1 - This project, including the design and hypotheses, was preregistered at OSF before data collection had started (osf.io/ubhz8). IS - 24 ER - TY - RPRT A1 - Andres, Maximilian A1 - Bruttel, Lisa Verena A1 - Friedrichsen, Jana T1 - Choosing between explicit cartel formation and tacit collusion – An experiment T2 - CEPA Discussion Papers N2 - Numerous studies investigate which sanctioning institutions prevent cartel formation but little is known as to how these sanctions work. We contribute to understanding the inner workings of cartels by studying experimentally the effect of sanctioning institutions on firms’ communication. Using machine learning to organize the chat communication into topics, we find that firms are significantly less likely to communicate explicitly about price fixing when sanctioning institutions are present. At the same time, average prices are lower when communication is less explicit. A mediation analysis suggests that sanctions are effective in hindering cartel formation not only because they introduce a risk of being fined but also by reducing the prevalence of explicit price communication. T3 - CEPA Discussion Papers - 19 KW - cartel KW - collusion KW - communication KW - machine learning KW - experiment Y1 - 2020 U6 - http://nbn-resolving.de/urn/resolver.pl?urn:nbn:de:kobv:517-opus4-473885 SN - 2628-653X IS - 19 ER - TY - RPRT A1 - Andres, Maximilian A1 - Bruttel, Lisa Verena A1 - Friedrichsen, Jana T1 - How communication makes the difference between a cartel and tacit collusion BT - a machine learning approach T2 - CEPA Discussion Papers N2 - This paper sheds new light on the role of communication for cartel formation. Using machine learning to evaluate free-form chat communication among firms in a laboratory experiment, we identify typical communication patterns for both explicit cartel formation and indirect attempts to collude tacitly. We document that firms are less likely to communicate explicitly about price fixing and more likely to use indirect messages when sanctioning institutions are present. This effect of sanctions on communication reinforces the direct cartel-deterring effect of sanctions as collusion is more difficult to reach and sustain without an explicit agreement. Indirect messages have no, or even a negative, effect on prices. T3 - CEPA Discussion Papers - 53 KW - cartel KW - collusion KW - communication KW - machine learning KW - experiment Y1 - 2022 U6 - http://nbn-resolving.de/urn/resolver.pl?urn:nbn:de:kobv:517-opus4-562234 SN - 2628-653X ER - TY - RPRT A1 - Bruttel, Lisa Verena T1 - Is There a Loyalty-Enhancing Effect of Retroactive Price-Reduction Schemes? T2 - CEPA Discussion Papers N2 - This paper presents an experiment on the effect of retroactive price-reduction schemes on buyers’ repeated purchase decisions. Such schemes promise buyers a reduced price for all units that are bought in a certain time frame if the total quantity that is purchased passes a given threshold. This study finds a loyalty-enhancing effect of retroactive price-reduction schemes only if the buyers ex-ante expected that entering into the scheme would maximize their monetary gain, but later learn that they should leave the scheme. Furthermore, the effect crucially hinges on the framing of the price reduction. T3 - CEPA Discussion Papers - 5 KW - rebate and discount KW - buyer behavior KW - risk aversion KW - loss aversion KW - regulation of dominant firms KW - experiment Y1 - 2019 U6 - http://nbn-resolving.de/urn/resolver.pl?urn:nbn:de:kobv:517-opus4-427688 SN - 2628-653X IS - 5 ER - TY - RPRT A1 - Bruttel, Lisa Verena A1 - Eisenkopf, Gerald A1 - Nithammer, Juri T1 - Pre-election communication in public good games with endogenous leaders T2 - CEPA Discussion Papers N2 - Leadership plays an important role for the efficient and fair solution of social dilemmas but the effectiveness of a leader can vary substantially. Two main factors of leadership impact are the ability to induce high contributions by all group members and the (expected) fair use of power. Participants in our experiment decide about contributions to a public good. After all contributions are made, the leader can choose how much of the joint earnings to assign to herself; the remainder is distributed equally among the followers. Using machine learning techniques, we study whether the content of initial open statements by the group members predicts their behavior as a leader and whether groups are able to identify such clues and endogenously appoint a “good” leader to solve the dilemma. We find that leaders who promise fairness are more likely to behave fairly, and that followers appoint as leaders those who write more explicitly about fairness and efficiency. However, in their contribution decision, followers focus on the leader’s first-move contribution and place less importance on the content of the leader’s statements. T3 - CEPA Discussion Papers - 73 KW - leadership KW - public good KW - voting KW - experiment KW - promises Y1 - 2024 U6 - http://nbn-resolving.de/urn/resolver.pl?urn:nbn:de:kobv:517-opus4-623952 SN - 2628-653X IS - 73 ER - TY - RPRT A1 - Bruttel, Lisa Verena A1 - Felgendreher, Simon A1 - Güth, Werner A1 - Hertwig, Ralph T1 - Strategic ignorance in repeated prisoners’ dilemma experiments and its effects on the dynamics of voluntary cooperation T2 - CEPA Discussion Papers N2 - Being ignorant of key aspects of a strategic interaction can represent an advantage rather than a handicap. We study one particular context in which ignorance can be beneficial: iterated strategic interactions in which voluntary cooperation may be sustained into the final round if players voluntarily forego knowledge about the time horizon. We experimentally examine this option to remain ignorant about the time horizon in a finitely repeated two-person prisoners’ dilemma game. We confirm that pairs without horizon knowledge avoid the drop in cooperation that otherwise occurs toward the end of the game. However, this effect is superposed by cooperation declining more rapidly in pairs without horizon knowledge during the middle phase of the game, especially if players do not know that the other player also wanted to remain ignorant of the time horizon. T3 - CEPA Discussion Papers - 10 KW - strategic ignorance KW - cooperation KW - prisoners' dilemma KW - experiment Y1 - 2019 U6 - http://nbn-resolving.de/urn/resolver.pl?urn:nbn:de:kobv:517-opus4-431881 SN - 2628-653X IS - 10 ER - TY - RPRT A1 - Bruttel, Lisa Verena A1 - Güth, Werner A1 - Hertwig, Ralph A1 - Orland, Andreas T1 - Do people harness deliberate ignorance to avoid envy and its detrimental effects? T2 - CEPA Discussion Papers N2 - Envy is an unpleasant emotion. If individuals anticipate that comparing their payoff with the (potentially higher) payoff of others will make them envious, they may want to actively avoid information about other people’s payoffs. Given the opportunity to reduce another person’s payoff, an individual’s envy may trigger behavior that is detrimental to welfare. In this case, if individuals anticipate that they will react in a welfare-reducing way, they may also avoid information about other people’s payoffs from the outset. We investigated these two hypotheses using three experiments. We found that 13% of our potentially envious subjects avoided information when they did not have the opportunity to reduce another participant’s payoff. Psychological scales do not explain this behavior. We also found that voluntarily uninformed subjects did neither deduct less of the payoff nor less frequently than subjects who could not avoid the information. T3 - CEPA Discussion Papers - 17 KW - envy KW - emotion regulation KW - deliberate ignorance KW - punishment KW - experiment Y1 - 2020 U6 - http://nbn-resolving.de/urn/resolver.pl?urn:nbn:de:kobv:517-opus4-444463 SN - 2628-653X IS - 17 ER -