Price stickiness and strategic uncertainty: An experimental study

B-Tier
Journal: Journal of Economic Dynamics and Control
Year: 2025
Volume: 180
Issue: C

Authors (4)

Funaki, Yukihiko (not in RePEc) Kawamura, Kohei (not in RePEc) Ueda, Kozo (Australian National University) Uto, Nobuyuki (not in RePEc)

Score contribution per author:

0.503 = (α=2.01 / 4 authors) × 1.0x B-tier

α: calibrated so average coauthorship-adjusted count equals average raw count

Abstract

We identify a minimal set of components to generate price stickiness by a laboratory experiment on an oligopolistic price setting game. Our design involves repeated aggregate shocks to the market but features no uncertainty in their timing and magnitude, no real-nominal distinction, or no need to compute the best response to the prices of the other subjects. We find persistent price stickiness when prices are strategic complements and fully anticipated shocks lower the equilibrium price. By exploring the causes of the observed downward stickiness, we find that it stems from strategic uncertainty regarding beliefs about others' prices, compounded by strategic complementarity and an asymmetric payoff structure.

Technical Details

RePEc Handle
repec:eee:dyncon:v:180:y:2025:i:c:s0165188925001526
Journal Field
Macro
Author Count
4
Added to Database
2026-01-29