TY - JOUR

T1 - Faking Patience with Tacit Collusion

AU - Parilina, Elena

AU - Tampieri, Alessandro

N1 - Publisher Copyright: © 2023 World Scientific Publishing Company.

PY - 2023/6/1

Y1 - 2023/6/1

N2 - This paper analyzes coordination in tacit collusion when firms' discount factor is private information. We consider an infinitely repeated duopoly where two states of the world randomly occur, with different incentives for collusion. Depending on its own discount factor, a firm chooses cooperative behavior in both states (patient), in none of the states (impatient) or in one state (mildly patient). The presence of different states affects the strategic role of beliefs. A mildly patient firm has an incentive in "faking patience"to get the deviation profit. Interestingly, this effect prevents or delays collusion when the belief in patience is strong.

AB - This paper analyzes coordination in tacit collusion when firms' discount factor is private information. We consider an infinitely repeated duopoly where two states of the world randomly occur, with different incentives for collusion. Depending on its own discount factor, a firm chooses cooperative behavior in both states (patient), in none of the states (impatient) or in one state (mildly patient). The presence of different states affects the strategic role of beliefs. A mildly patient firm has an incentive in "faking patience"to get the deviation profit. Interestingly, this effect prevents or delays collusion when the belief in patience is strong.

KW - duopoly games

KW - Tacit collusion

KW - unknown discount factor

UR - http://www.scopus.com/inward/record.url?scp=85143515546&partnerID=8YFLogxK

UR - https://www.mendeley.com/catalogue/9fa2ff00-fca3-397f-af13-19845d519689/

U2 - 10.1142/s0219198923500032

DO - 10.1142/s0219198923500032

M3 - Article

AN - SCOPUS:85143515546

VL - 25

JO - International Game Theory Review

JF - International Game Theory Review

SN - 0219-1989

IS - 2

M1 - 2350003

ER -