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Tacit Collusion in Repeated Contests with Noise

Boudreau, James W. and Shunda, Nicholas (2015): Tacit Collusion in Repeated Contests with Noise.

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Abstract

We analyze the determinants of tacit collusion in an infinitely repeated contest with noise in the contest success function. Sustaining collusion via Nash reversion strategies is easier the more noise there is, and is more difficult the larger is the contest's prize value. An increase in the contest's number of players can make sustaining collusion either more or less difficult.

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