We study the effect of demand structure on the ability of subjects to tacitly collude on prices by considering Bertrand substitutes and Bertrand complements. We find evidence of collusion in the complements treatment, but no such evidence in the substitutes treatment. This finding is somewhat in...

We investigate the relationship between collusive behavior in Bertrand oligopoly experiments and subject heterogeneity in risk preferences. We find that risk aversion is positively associated with tacit collusion when the goods are complements, but find no evidence of collusive behavior when the...

We experimentally test a rent seeking model under five levels of competition. At one extreme, a subject’s probability of winning a prize is equal to her share of the total expenditures. At lower levels of competition, a subject’s probability of winning is affected more by her own...

This paper outlines a classroom experiment that complements the standard theoretical discussion of Hotelling's (1929) spatial competition model. The exercise provides students with a deeper understanding of the intuition behind competitive clustering, resolving the Bertrand paradox, and product...

This paper describes a simple classroom experiment in which students decide which projects to fund on the basis of majority voting. Several agendas are used to generate a voting cycle and an inefficiently high level of public spending. Classroom discussion allows students to discover for...

This paper uses the technique of experimental economics to set up a classroom situation where students learn to make Bayesian decisions. The exercises allow students to discover for themselves a natural counting heuristic that corresponds to Bayes's rule and is much quicker to use in many...

This paper describes how to set up a classroom exercise in which students see private signals and make public decisions in sequence. A pattern of conforming decisions in this context is called an information cascade. Once a cascade starts, it is rational for students to ignore their private...