Research

The Effect of Potential Collusion on Equilibrium Prices (in collaboration with Tom-Reiel Heggedal and Espen R. Moen, PDF)

We investigate how possible collusion, interpreted as a positive prior probability that collusion may occur, influences equilibrium prices in states of the world in which collusion, in fact, does not occur. We explore the mechanism in a theoretical model of consumer search, based on the Stahl (1989)framework, and show that with possible collusion, equilibrium prices are higher even in the absence of collusion. We test the model's predictions in a series of laboratory experiments. The results are qualitatively consistent with our theoretical predictions.

Reputation and Coordination: Experimental Evidence (in collaboration with Tom-Reiel Heggedal, PDF).

We experimentally investigate the impact of reputation on players’ ability to coordinate on the efficient outcome.  We set up an indefinitely repeated game based on Fudenberg and Levine (1989) where a long-lived player faces a trade-off between the long-run gains of building reputation and the short-run gains of deviation. The joint payoff-maximizing outcome, which is also the preferred outcome of the short-lived player, can be sustained as an equilibrium. However, so is repeated play of the static and inefficient equilibrium. As such, reaching the efficient equilibrium requires that players are able to coordinate. Theory predicts that the presence of commitment types will help players to coordinate on the efficient outcome as the long-lived player may build a reputation of being a commitment type. The experimental results corroborate the theoretical prediction: participants are significantly and substantially more able to coordinate on the efficient outcome when they can build reputation compared to when they cannot. We document that this effect seem to work through the belief mechanism suggested by theory.

Reputational Cheap-Talk with Limited Records (link to paper)

I study a setting where a sender in each period communicates her information about a hidden state to a new receiver whose optimal action depends on the state. Each receiver observes a limited record of the sender's history of honesty. The sender has a commitment type who always communicates the true state. I show that when the prior on the commitment types is zero, any equilibrium is a babbling equilibrium, and that babbling equilibria may persist even when the prior on the commitment types is strictly positive and the sender is patient. Furthermore, I show that if the prior on the good state is low, then any equilibrium features information transmission and that if there is information transmission in equilibrium, the dynamics are cyclical: The rate of honesty increases up until the point where the history only includes honest communication, at which point the sender will abuse trust with certainty. Finally, I demonstrate that there may be more information transmission with limited record than with full records, and I derive a lower bound on equilibrium payoffs of the sender.   

No justice without spite (in collaboration with Michalis Drouvelis at the University of Birmingham).

Ratings, Externalities and Competition (in collaboration with Thomas de Haan at the University of Bergen).

Information Bundling and Product Differentiation (in collaboration with Thomas de Haan at the University of Bergen).