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Amy Moore and Michael Taylor
''Non-binding signals: are they effective or ineffectual?''
( 2008, Vol. 3 No.53 )
Companies often send non-binding messages to their competitors, to consumers, to channel members and to various other recipients. When such messages are in the form of price signals, they tend to make antitrust authorities uneasy since it is widely believed that price signaling can and does serve as a collusion facilitating mechanism. We conducted experimental posted-offer markets with multiple competitive equilibria, and found that contrary to expectations, markets in which sellers could engage in cheap talk had lower contract prices than markets without cheap talk opportunities.
Keywords: posted-offer markets
JEL: C9 - Design of Experiments: General
Manuscript Received : Aug 25 2008 Manuscript Accepted : Aug 31 2008

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