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Extremism Drives Out Moderation

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  • Bettina Klose
  • Dan Kovenock J.

Abstract

This article investigates the impact of the distribution of preferences on equilibrium behavior in conflicts that are modeled as all-pay auctions with identity-dependent externalities. In this context, we define centrists and radicals using a willingness-to-pay criterion that admits preferences more general than a simple ordering on the line. Through a series of examples, we show that substituting the auction contest success function for the lottery contest success function in a conflict may alter the relative expenditures of centrists and radicals in equilibrium. Extremism, characterized by a higher per capita expenditure by radicals than centrists, may persist and lead to a higher aggregate expenditure by radicals, even when they are relatively small in number. Moreover, we show that centrists may in the aggregate expend zero, even if they vastly outnumber radicals. Our results demonstrate the importance of the choice of the institutions of conflict, as modeled by the contest success function, in determining the role of extremism and moderation in economic, political, and social environments.

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Bibliographic Info

Paper provided by CESifo Group Munich in its series CESifo Working Paper Series with number 3804.

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Date of creation: 2012
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Handle: RePEc:ces:ceswps:_3804

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Keywords: conflict; all-pay auction; identity-dependent externalities; radicalism; extremism; contest success function;

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  1. Martin Osborne & Jeffry Rosenthal & Matthew A. Turner, 1998. "Meetings with costly participation," Working Papers mturner-98-02, University of Toronto, Department of Economics.
  2. Baye, M.R. & Kovenock, D. & De Vries, C., 1992. "The All-Pay Auction with Complete Information," Papers 8-92-1, Pennsylvania State - Department of Economics.
  3. Konrad, Kai Andreas, 2005. "Silent interests and all-pay auctions," Discussion Papers, Research Unit: Market Processes and Governance SP II 2005-10, Social Science Research Center Berlin (WZB).
  4. Funk, Peter, 1996. "Auctions with Interdependent Valuations," International Journal of Game Theory, Springer, vol. 25(1), pages 51-64.
  5. Linster, Bruce G, 1993. " A Generalized Model of Rent-Seeking Behavior," Public Choice, Springer, vol. 77(2), pages 421-35, October.
  6. Moldovanu, Benny & Sela, Aner, 1999. "The Optimal Allocation of Prizes in Contests," Sonderforschungsbereich 504 Publications 99-75, Sonderforschungsbereich 504, Universität Mannheim & Sonderforschungsbereich 504, University of Mannheim.
  7. Konrad, Kai A., 2009. "Strategy and Dynamics in Contests," OUP Catalogue, Oxford University Press, number 9780199549603, September.
  8. Yeon-Koo Che & Ian Gale, 1998. "Caps on Political Lobbying," Microeconomics 9809003, EconWPA.
  9. Joy Buchanan & Bart Wilson, 2014. "An Experiment on Protecting Intellectual Property," Working Papers 1044, George Mason University, Interdisciplinary Center for Economic Science.
  10. Baik, Kyung Hwan & Lee, Sanghack, 2001. "Strategic Groups and Rent Dissipation," Economic Inquiry, Western Economic Association International, vol. 39(4), pages 672-84, October.
  11. Ron Siegel, 2009. "All-Pay Contests," Econometrica, Econometric Society, vol. 77(1), pages 71-92, 01.
  12. Ron Siegel, 2010. "Asymmetric Contests with Conditional Investments," American Economic Review, American Economic Association, vol. 100(5), pages 2230-60, December.
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