Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/301157 
Year of Publication: 
2024
Series/Report no.: 
WZB Discussion Paper No. SP II 2024-203
Publisher: 
Wissenschaftszentrum Berlin für Sozialforschung (WZB), Berlin
Abstract: 
We use a laboratory experiment to investigate whether statements from a governmental institution expressing concerns about price increases trigger such increases by facilitating tacit collusion. Such statements on market conduct are disclosed after an exogenous and unexpected upward cost shock. The two potential channels affecting tacit collusion work through (i) a reduction of strategic uncertainty and (ii) an inducement of correlated beliefs. We find that issued statements of concern become a self-fulfilling prophecy, triggering price increases, and that a reduction in strategic uncertainty drives this adverse effect. Our results suggest that institutions should refrain from publishing such statements of concern
Subjects: 
beliefs
coordination device
strategic uncertainty
tacit collusion
JEL: 
C91
C72
L41
Document Type: 
Working Paper

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