Trust and recidivism; the partial success of leniency programs in the laboratory
Abstract of the presentation:
This paper experimentally investigates the effect of leniency programs on cartel formation and internal cartel stability. In a setting with repeated interaction we study how leniency programs affect cartel formation, cartel stability and cartel recidivism. We find that leniency programs lead to lower prices because less cartels are established but also because cartel members defect because of possibility to combine defecting + reporting more often, reducing the average lifetime of cartels. We do not find evidence that leniency programs attenuate the problem of cartel recidivism: the average number of follow-up cartels is equal to the average number when no leniency program is in place (Joint work with Adriaan Soetevent).
- Marcos Poplawski-Ribeiro (AE) (firstname.lastname@example.org)
- Cesar Ariza Rojas (C.J.ArizaRojas@uva.nl)