Collusion under Yardstick Competition: An Experimental Study

J.J.M. Potters, B. Rockenbach, A. Sadrieh, E.E.C. van Damme

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Abstract

The effectiveness of relative performance evaluation schemes, such as yardstick competition, can be undermined by collusion.The degree to which the regulated agents manage to collude will be affected by the particulars of the scheme.We hypothesize that in a repeated game setting schemes will be more prone to collusion the smaller are the rents to the agents in case they behave non-cooperatively.We illustrate the relevance of this hypothesis by means of an economic experiment in which we compare the efficiency of two performance evaluation schemes.
Original languageEnglish
Place of PublicationTilburg
PublisherMicroeconomics
Number of pages24
Volume2003-97
Publication statusPublished - 2003

Publication series

NameCentER Discussion Paper
Volume2003-97

Keywords

  • performance evaluation
  • competition
  • efficiency
  • games
  • collusion
  • yardstick

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  • Cite this

    Potters, J. J. M., Rockenbach, B., Sadrieh, A., & van Damme, E. E. C. (2003). Collusion under Yardstick Competition: An Experimental Study. (CentER Discussion Paper; Vol. 2003-97). Microeconomics.