Leniency Experiment

This page supports the paper “Leniency Programs and the Design of Antitrust: Experimental Evidence with Free-Form Communication” (joint with Peter Dijkstra and Bert Schoonbeek).

In the paper, we present experimental evidence on the effectiveness of corporate leniency programs. Different from other leniency experiments, ours allows subjects to have free-form communication. We do not find much of an effect of leniency programs. Leniency does not deter cartels. It only defers them.  Free-form communication allows subjects to build trust and resolve conflicts. Reporting and defection rates are low, especially when compared to experiments with restricted communication. Indeed, communication is so effective that, with leniency, prices are not affected if cartels are fined and cease to exist.

The full paper can be found here.

Online Appendix A can be found here. It gives the theoretical background of the experiment.

Online Appendix B can be found here. It gives the instructions of the experiment.

Online Appendix C can be found here. It provides a detailed overview of what happened on each of our experimental markets.

We also prepared a Companion Note with many regression specifications that did not make it into the final version of the paper.

This zip-file contains all data and Stata do-files.