Research

Endowment Origin, Demographic Effects and Individual Preferences in Contests

Authors

Published

Journal of Economics and Management Strategy

Website

http://http://ideas.repec.org/p/chu/wpaper/12-07.html

Abstract

Due to the high costs of conflict both in theory and practice, we examine and experimentally test the conditions under which conflict between asymmetric agents can be resolved. We model conflict as a two-agent rent-seeking contest for an indivisible prize. Before conflict arises, both agents may agree to allocate the prize by fair coin flip to avoid the costs of conflict. In equilibrium, risk-neutral agents with relatively symmetric conflict capabilities agree to resolve the conflict by randomization. However, with sufficiently asymmetric capabilities, conflicts are unavoidable because the stronger agent prefers to fight. The results of the experiment confirm that the availability of the random device partially eliminates conflicts when agents are relatively symmetric; however, the device also reduces conflict between substantially asymmetric agents.



Roman Sheremeta



Social Media
Weatherhead School of Management
Case Western Reserve University

10900 Euclid Avenue
Cleveland, Ohio 44106-7235 USA

216.368.2030

weatherhead@case.edu