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Resolving Conflicts by a Random Device

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Author Info

  • Erik O. Kimbrough

    (Department of Economics (AE1), School of Business and Economics, Maastricht University, The Netherlands)

  • Roman M. Sheremeta

    ()
    (Argyros School of Business and Economics, Chapman University, USA)

  • Timothy Shields

    ()
    (Argyros School of Business and Economics, Chapman University, USA)

Abstract

We examine conflict resolution via a random device. We model conflict as a two-agent rent-seeking contest for a fixed prize. Before conflict arises, both agents may agree to allocate the prize by 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. Laboratory experiments 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.

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Bibliographic Info

Paper provided by Chapman University, Economic Science Institute in its series Working Papers with number 11-09.

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Length: 33 pages
Date of creation: 2011
Date of revision:
Handle: RePEc:chu:wpaper:11-09

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Related research

Keywords: Beauty contest; conflict resolution; experiments;

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References

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  1. Hehenkamp, B. & Leininger, W. & Possajennikov, A., 2004. "Evolutionary equilibrium in Tullock contests: spite and overdissipation," European Journal of Political Economy, Elsevier, vol. 20(4), pages 1045-1057, November.
  2. Mago, Shakun & Samak, Anya & Sheremeta, Roman, 2013. "Facing Your Opponents: Social Identification and Information Feedback in Contests," MPRA Paper 47029, University Library of Munich, Germany.
  3. Sheremeta, Roman, 2009. "Contest Design: An Experimental Investigation," MPRA Paper 52101, University Library of Munich, Germany.
  4. John Morgan & Henrik Orzen & Martin Sefton, 2008. "Endogenous Entry in Contests," Discussion Papers 2008-08, The Centre for Decision Research and Experimental Economics, School of Economics, University of Nottingham.
  5. Douglas Davis & Robert Reilly, 1998. "Do too many cooks always spoil the stew? An experimental analysis of rent-seeking and the role of a strategic buyer," Public Choice, Springer, vol. 95(1), pages 89-115, April.
  6. Fonseca, Miguel A., 2009. "An experimental investigation of asymmetric contests," International Journal of Industrial Organization, Elsevier, vol. 27(5), pages 582-591, September.
  7. Gary Charness & Matthew Rabin, 2003. "Understanding Social Preferences with Simple Tests," General Economics and Teaching 0303002, EconWPA.
  8. Ernst Fehr & Klaus M. Schmidt, . "A Theory of Fairness, Competition and Cooperation," IEW - Working Papers 004, Institute for Empirical Research in Economics - University of Zurich.
  9. Lisa Anderson & Beth Freeborn, 2010. "Varying the intensity of competition in a multiple prize rent seeking experiment," Public Choice, Springer, vol. 143(1), pages 237-254, April.
  10. Erik O. Kimbrough & Roman Sheremeta, 2010. "Make Him an Offer He Can’t Refuse: Avoiding Conflicts through Side Payments," Working Papers 10-23, Chapman University, Economic Science Institute.
  11. Sheremeta, Roman & Zhang, Jingjing, 2009. "Can Groups Solve the Problem of Over-Bidding in Contests?," MPRA Paper 49885, University Library of Munich, Germany.
  12. Sheremeta, Roman, 2009. "Experimental Comparison of Multi-Stage and One-Stage Contests," MPRA Paper 49884, University Library of Munich, Germany.
  13. Philip Brookins & John Lightle & Dmitry Ryvkin, 2014. "An experimental study of sorting in group contests," Working Papers wp2014_01_01, Department of Economics, Florida State University.
  14. Urs Fischbacher, 2007. "z-Tree: Zurich toolbox for ready-made economic experiments," Experimental Economics, Springer, vol. 10(2), pages 171-178, June.
  15. Stefan Szymanski, 2003. "The Economic Design of Sporting Contests," Journal of Economic Literature, American Economic Association, vol. 41(4), pages 1137-1187, December.
  16. Benedikt Herrmann & Henrik Orzen, 2008. "The appearance of homo rivalis: Social preferences and the nature of rent seeking," Discussion Papers 2008-10, The Centre for Decision Research and Experimental Economics, School of Economics, University of Nottingham.
  17. Lisa Anderson & Beth Freeborn, 2010. "Erratum to: Varying the intensity of competition in a multiple prize rent seeking experiment," Public Choice, Springer, vol. 143(1), pages 255-256, April.
  18. Iannaccone, Laurence R. & Haight, Colleen E. & Rubin, Jared, 2011. "Lessons from Delphi: Religious markets and spiritual capitals," Journal of Economic Behavior & Organization, Elsevier, vol. 77(3), pages 326-338, March.
  19. Axel Ockenfels & Gary E. Bolton, 2000. "ERC: A Theory of Equity, Reciprocity, and Competition," American Economic Review, American Economic Association, vol. 90(1), pages 166-193, March.
  20. Wolfgang Leininger, 2003. "On evolutionarily stable behavior in contests," Economics of Governance, Springer, vol. 4(3), pages 177-186, November.
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Citations

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Cited by:
  1. Steven Tucker & Charles Noussair & Roman M. Sheremeta, 2013. "Overbidding And Heterogeneous Behavior In Contest Experiments," Journal of Economic Surveys, Wiley Blackwell, vol. 27(3), pages 491-514, 07.
  2. Tanja Hörtnagl & Rudolf Kerschbamer & Rudi Stracke & Uwe Sunde, 2013. "Heterogeneity in Rent-Seeking Contests with Multiple Stages: Theory and Experimental Evidence," CESifo Working Paper Series 4435, CESifo Group Munich.
  3. Erik O. Kimbrough & Jared Rubin & Roman M. Sheremeta & Timothy Shields, 2013. "Commitment Problems in Conflict Resolution," Working Papers 13-11, Chapman University, Economic Science Institute.

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