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Endogenous coalition formation in contests

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  • Santiago Sánchez-Pagés

Abstract

This paper analyzes coalition formation in a model of contests with linear costs. Agents first form groups and then compete by investing resources. Coalitions fight for prizes that are assumed to be subject to rivalry, so their value is non-increasing in the size of the group. This formulation encompasses as particular cases some models proposed in the rent-seeking literature. We show that the formation of groups generates positive spillovers and analyze two classes of games of coalition formation. A contest among individual agents is the only stable outcome when individual defections leave the rest of the group intact. More concentrated coalition structures, including the grand coalition, are stable when groups collapse after a defection, provided that rivalry is not too strong. Results in a sequential game of coalition formation suggest that there exists a non-monotonic relationship between the level of underlying rivalry and the level of social conflict.
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  • Santiago Sánchez-Pagés, 2007. "Endogenous coalition formation in contests," Review of Economic Design, Springer;Society for Economic Design, vol. 11(2), pages 139-163, September.
    • Handle: RePEc:spr:reecde:v:11:y:2007:i:2:p:139-163
    DOI: 10.1007/s10058-007-0033-4
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    Cited by:

    1. Epstein, Gil S. & Mealem, Yosef & Nitzan, Shmuel, 2011. "Political culture and discrimination in contests," Journal of Public Economics, Elsevier, vol. 95(1), pages 88-93.
    2. Vincent Anesi, 2009. "Moral hazard and free riding in collective action," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 32(2), pages 197-219, February.
    3. Imamura, Kenzo & Konishi, Hideo & Pan, Chen-Yu, 2023. "Stability in matching with externalities: Pairs competition and oligopolistic joint ventures," Journal of Economic Behavior & Organization, Elsevier, vol. 205(C), pages 270-286.
    4. Guofu Tan & Ruqu Wang, 2010. "Coalition formation in the presence of continuing conflict," International Journal of Game Theory, Springer;Game Theory Society, vol. 39(1), pages 273-299, March.
    5. Herbst, Luisa & Konrad, Kai A. & Morath, Florian, 2015. "Endogenous group formation in experimental contests," European Economic Review, Elsevier, vol. 74(C), pages 163-189.
    6. Konishi, Hideo & Pan, Chen-Yu, 2021. "Endogenous alliances in survival contests," Journal of Economic Behavior & Organization, Elsevier, vol. 189(C), pages 337-358.
    7. Ricardo Nieva, 2021. "Heterogeneous coalitions and social revolutions," Rationality and Society, , vol. 33(2), pages 229-275, May.
    8. Dongryul Lee & Pilwon Kim, 2018. "Group formation under limited resources: narrow basin of equality," Palgrave Communications, Palgrave Macmillan, vol. 4(1), pages 1-6, December.
    9. Matthew Baker & Erwin Bulte, 2010. "Kings and Vikings: on the dynamics of competitive agglomeration," Economics of Governance, Springer, vol. 11(3), pages 207-227, June.
    10. Aniruddha Bagchi & João Ricardo Faria & Timothy Mathews, 2019. "A model of a multilateral proxy war with spillovers," Public Choice, Springer, vol. 179(3), pages 229-248, June.
    11. Dongryul Lee & Pilwon Kim, 2022. "Group formation in a dominance-seeking contest," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 58(1), pages 39-68, January.
    12. Saish Nevrekar, 2022. "Efficiency effects on coalition formation in contests," ECON - Working Papers 412, Department of Economics - University of Zurich.
    13. Hideo Konishi & Chen-Yu Pan & Dimitar Simeonov, 2023. "Formation of Teams in Contests: Tradeoffs Between Inter and Intra-Team Inequalities," Boston College Working Papers in Economics 1061, Boston College Department of Economics.
    14. Peter-J. Jost, 2021. "Endogenous formation of entrepreneurial networks," Small Business Economics, Springer, vol. 56(1), pages 39-64, January.
    15. Karl Jandoc & Ruben Juarez, 2019. "An Experimental Study of Self-Enforcing Coalitions," Games, MDPI, vol. 10(3), pages 1-32, August.

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    More about this item

    Keywords

    Contests; Coalition formation; Conflict; Rivalry; C72; D72; D74;
    All these keywords.

    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • D74 - Microeconomics - - Analysis of Collective Decision-Making - - - Conflict; Conflict Resolution; Alliances; Revolutions

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