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Cooperation in a differentiated duopoly when information is dispersed: A beauty contest game with endogenous concern for coordination

Author

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  • Camille Cornand

    (GATE Lyon Saint-Étienne - Groupe d'Analyse et de Théorie Economique Lyon - Saint-Etienne - ENS de Lyon - École normale supérieure de Lyon - UL2 - Université Lumière - Lyon 2 - UCBL - Université Claude Bernard Lyon 1 - Université de Lyon - UJM - Université Jean Monnet - Saint-Étienne - CNRS - Centre National de la Recherche Scientifique)

  • Rodolphe dos Santos Ferreira

    (BETA - Bureau d'Économie Théorique et Appliquée - INRA - Institut National de la Recherche Agronomique - UNISTRA - Université de Strasbourg - UL - Université de Lorraine - CNRS - Centre National de la Recherche Scientifique)

Abstract

The paper provides a micro-founded differentiated duopoly illustration of a beauty contest, in which the weight put on the strategic vs. the fundamental motive of the payoffs is not exogenous but may be manipulated by the players. We emphasize the role of the competition component of the strategic motive as a source of conflict with the fundamental motive. This conflict, already present in an oligopolistic setting under perfect information, is only exacerbated when information is imperfect and dispersed. We show how firm owners ease such conflict by opting for some cooperation, thus moderating the competitive toughness displayed by their managers. By doing so, they also influence the managers' strategic concern for coordination and consequently the weight put on public relative to private information.

Suggested Citation

  • Camille Cornand & Rodolphe dos Santos Ferreira, 2015. "Cooperation in a differentiated duopoly when information is dispersed: A beauty contest game with endogenous concern for coordination," Working Papers halshs-01116156, HAL.
    • Handle: RePEc:hal:wpaper:halshs-01116156
    Note: View the original document on HAL open archive server: https://shs.hal.science/halshs-01116156v5
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    References listed on IDEAS

    as
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    1. Camille Cornand & Rodolphe dos Santos Ferreira, 2017. "The social value of information and the competition motive: Price vs. quantity games," Working Papers halshs-01614815, HAL.
    2. Rodolphe Dos Santos Ferreira, 2021. "When Muth’s entrepreneurs meet Schrödinger’s cat," Revue d'économie politique, Dalloz, vol. 131(3), pages 449-459.
    3. Kene Boun My & Camille Cornand & Rodolphe dos Santos Ferreira, 2017. "Public information and the concern for coordination," Working Papers halshs-01485677, HAL.
    4. Kene Boun My & Camille Cornand & Rodolphe Dos Santos Ferreira, 2017. "Speculation rather than enterprise? Keynes’ beauty contest revisited in theory and experiment," Working Papers of BETA 2017-13, Bureau d'Economie Théorique et Appliquée, UDS, Strasbourg.
    5. Boun My, Kene & Cornand, Camille & Dos Santos Ferreira, Rodolphe, 2021. "Public information and the concern for coordination," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 93(C).
    6. Camille Cornand & Rodolphe Dos Santos Ferreira, 2020. "The social value of information and the competition motive: price versus quantity games," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 70(4), pages 1101-1137, November.

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    More about this item

    Keywords

    beauty contest; dispersed information; public information; competition; cooperation; coordination; delegation game; differentiated duopoly; dispersed information JEL codes: D43; D82; L13; L21;
    All these keywords.

    JEL classification:

    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • L21 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Business Objectives of the Firm

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