Is a Cartel Just an Ordinary Prisoner's Dilemma?

Posted: 16 May 2009

See all articles by Christoph Engel

Christoph Engel

Max Planck Society for the Advancement of the Sciences - Max Planck Institute for Research on Collective Goods; University of Bonn - Faculty of Law & Economics; Erasmus University Rotterdam (EUR), Erasmus School of Law, Rotterdam Institute of Law and Economics, Students; Universität Osnabrück - Faculty of Law

Date Written: May 18, 2009

Abstract

Ever since the heyday of the Chicago School, antitrust intervention has been under attack. One of the stronger counter-arguments is behavioural. Models predicting the absence of a social problem rely on the assumption that all agents are prevoyant maximisers of profit. Many experiments have shown that subjects are more likely to collude. However, other experimental findings point to behavioural forces mitigating the social detriment. Subjects collude less if they know they inflict harm on others. And they cooperate more if the structurally identical game is framed neutrally. Arguably this setting does not give them a chance to activate their world knowledge on the undesirability of collusion. The experiment to be presented puts these two forces to the direct test: externalities, and normativity. The main finding is this: only normativity helps. Society cannot dispense of antitrust intervention.

Suggested Citation

Engel, Christoph, Is a Cartel Just an Ordinary Prisoner's Dilemma? (May 18, 2009). Gruter Institute Squaw Valley Conference 2009: Law, Behavior & the Brain, Available at SSRN: https://ssrn.com/abstract=1405307

Christoph Engel (Contact Author)

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Universität Osnabrück - Faculty of Law

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