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INFERRING BUYER STRATEGIES AND THEIR IMPACT ON MONOPOLIST PRICING
Category: Econometrics
EMPIRICAL INDUSTRIAL ORGANIZATION Monday 26th August 2002, 14:30 - 16:00, Room: 1.11
Session Chair(s):
PFISTER Etienne , TEAM-CNRS-Université de Paris 1, FRANCE
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Abstract:
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We infer unobserved strategies from the actions of buyers in posted-offer market
economics experiments, with a new application of a Bayesian technique. We find that buyer strategies are effective as a counteracting response to monopoly power: market prices and monopolist profits are negatively correlated with strategy complexity.
One strategy is particulary effective: the unconditional and intense forgoing of profitable purchases early in the game is more effective than punishments that trigger when the price exceeds a threshhold. We conclude that strategy inference provides new insights into strategic behavior, and should at least
complement existing methods of statistical analysis.
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Find this file in the \Papers\155\ folder of this CD-ROM.
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