Recently, the Journal of Economic Theory, a top-ranking international journal in the field of theoretical economics, published a paper entitled "Cheating and compensation in price-fixing cartels" by Jihwan Do, who is an assistant professor from the School of Economics and Management, WHU.

This paper provides a theoretical explanation of “cheating and compensation on-path of play” using a canonical repeated game model of price-fixing collusion. The novel mechanism relies on firms playing mixed strategies, allowing for both the monopoly price and undercutting the monopoly price to happen with positive probability, together with a compensation scheme that punishes a price-cutter. For an intermediate range of discount factors, the mechanism is optimal in a restricted class of equilibrium, and such price-cutting and compensation are necessary parts for any symmetric collusive equilibrium.

In order to further increase internationalization and improve faculty development, the School of Economics and Management has made efforts to attract outstanding talent with more emphasis on the recruitment and training of faculty. The School has been continuously recruiting faculty with overseas PhDs, and the university and school startup provide research funds for early-career faculty, help international faculty become familiar with domestic scientific research institutions and the living environment, and provide a comprehensive English-speaking environment with support. Faculty have published in various international top-ranking journals such as the Journal of Economic Theory, and Economic Theory and Mathematics of Operations Research, which has played a positive role in promoting the internationalization of the School of Economics and Management at Wuhan University.

Link to the paper: https://doi.org/10.1016/j.jet.2021.105382

Written by: Wei Lijia  Zhou Yi

Rewritten by: Luo Yu