Scandinavian Working Papers in Economics

Working Paper Series,
Norwegian University of Life Sciences, School of Economics and Business

No 03-2017: Conspiracy against the public - an experiment on collusion

Åshild Auglænd Johnsen ()
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Åshild Auglænd Johnsen: School of Economics and Business, Norwegian University of Life Sciences, Postal: Norwegian University of Life Sciences, School of Economics and Business, P.O. Box 5003 NMBU, N-1432 Ås, Norway

Abstract: Cooperation is usually presented as prosocial and for the common good. But collusion is also a form of cooperation, where the gains from cooperation are at the public’s expense. How is collusion affected by this public aspect? Social preferences can mean caring for the public. But it can also mean caring for the bilateral relationship with one’s partner. This paper investigates cooperation when it is at the expense of the public, and compares it to cooperation when it is not at the public’s expense. I do so by running two versions of an infinitely repeated prisoner’s dilemma game: One version with and one without a public aspect. I find that there is more collusion when collusion is at the expense of the public conspiracy against the public.

Keywords: Infinitely repeated prisoner’s dilemma game; Negative externality; Cooperation; Collusion; Experiment

JEL-codes: C91; D03; D62; H41

27 pages, May 3, 2017

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