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Olson vs. Coase: coalitional worth in conflict

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  • Joan Esteban
  • Jozsef Sakovics

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Abstract

We analyze a model of conflict with endogenous choice of effort, where subsets of the contenders may force the resolution to be sequential: First the alliance fights it out with the rest and – in case they win – later they fight it out among themselves. For three-player games, we find that it will not be in the interest of any two of them to form an alliance. We obtain this result under two different scenarios: equidistant preferences with varying relative strengths, and vicinity of preferences with equal distribution of power. We conclude that the commonly made assumption of super-additive coalitional worth is suspect.

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Bibliographic Info

Paper provided by Edinburgh School of Economics, University of Edinburgh in its series ESE Discussion Papers with number 81.

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Length: 16
Date of creation: Mar 2004
Date of revision:
Handle: RePEc:edn:esedps:81

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Keywords: coalition formation; conflict; alliance.;

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References

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  1. Baik, Kyung Hwan & Lee, Sanghack, 2001. "Strategic Groups and Rent Dissipation," Economic Inquiry, Western Economic Association International, vol. 39(4), pages 672-84, October.
  2. Ray, Debraj & Vohra, Rajiv, 1999. "A Theory of Endogenous Coalition Structures," Games and Economic Behavior, Elsevier, vol. 26(2), pages 286-336, January.
  3. Michelle R. Garfinkel, 2003. "Stable Alliance Formation in Distributional Conflict," Public Economics 0305001, EconWPA, revised 16 Jun 2003.
  4. Noh, Suk Jae, 2002. "Resource distribution and stable alliances with endogenous sharing rules," European Journal of Political Economy, Elsevier, vol. 18(1), pages 129-151, March.
  5. Ray, D. & Vohra, R., 1993. "Equilibrium Binding Agreements," Papers 21, Boston University - Department of Economics.
  6. Francis Bloch & Santiago S?chez-Pag? & Raphael Soubeyran, . "When does universal peace prevail? Secession and group formation in rent seeking contests and policy conflD72icts," UFAE and IAE Working Papers 543.02, Unitat de Fonaments de l'Anàlisi Econòmica (UAB) and Institut d'Anàlisi Econòmica (CSIC).
  7. Francis Bloch & Santiago Sánchez-Pagés & Raphaël Soubeyran, 2006. "When does universal peace prevail? Secession and group formation in conflict," Economics of Governance, Springer, vol. 7(1), pages 3-29, 01.
  8. Skaperdas, Stergios, 1998. " On the Formation of Alliances in Conflict and Contests," Public Choice, Springer, vol. 96(1-2), pages 25-42, July.
  9. Esteban, J. & Sakovics, J., 2000. "Temporary Alliance Formation: Endogenous Sequencing in Conflict Games," Papers 43, El Instituto de Estudios Economicos de Galicia Pedro Barrie de la Maza.
  10. Greenberg, Joseph, 1994. "Coalition structures," Handbook of Game Theory with Economic Applications, in: R.J. Aumann & S. Hart (ed.), Handbook of Game Theory with Economic Applications, edition 1, volume 2, chapter 37, pages 1305-1337 Elsevier.
  11. Esteban, Joan & Ray, Debraj, 1999. "Conflict and Distribution," Journal of Economic Theory, Elsevier, vol. 87(2), pages 379-415, August.
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Cited by:
  1. Michelle R. Garfinkel, 2003. "On the Stability of Group Formation: Managing the Conflict Within," Public Economics 0312005, EconWPA, revised 04 Mar 2004.
  2. Changxia Ke & Kai A. Konrad & Florian Morath, 2010. "Brothers in Arms - An Experiment on the Alliance Puzzle," CESifo Working Paper Series 3302, CESifo Group Munich.
  3. Konrad, Kai A. & Kovenock, Dan, 2008. "The alliance formation puzzle and capacity constraints," Discussion Papers, Research Unit: Market Processes and Governance SP II 2008-07, Social Science Research Center Berlin (WZB).
  4. Guofu Tan & Ruqu Wang, 2010. "Coalition formation in the presence of continuing conflict," International Journal of Game Theory, Springer, vol. 39(1), pages 273-299, March.
  5. Garfinkel, Michelle R. & Skaperdas, Stergios, 2007. "Economics of Conflict: An Overview," Handbook of Defense Economics, Elsevier.
  6. Ke, Changxia, 2013. "Fight Alone or Together? The Need to Belong," Discussion Paper Series of SFB/TR 15 Governance and the Efficiency of Economic Systems 421, Free University of Berlin, Humboldt University of Berlin, University of Bonn, University of Mannheim, University of Munich.
  7. Santiago Sánchez-Pagés, 2007. "Endogenous coalition formation in contests," Review of Economic Design, Springer, vol. 11(2), pages 139-163, September.
  8. Francis Bloch, 2009. "Endogenous formation of alliances in conflicts," Working Papers hal-00435387, HAL.
  9. Adam Smith & David Skarbek & Bart Wilson, 2012. "Anarchy, groups, and conflict: an experiment on the emergence of protective associations," Social Choice and Welfare, Springer, vol. 38(2), pages 325-353, February.
  10. Konrad, Kai A., 2007. "Strategy in contests: an introduction," Discussion Papers, Research Unit: Market Processes and Governance SP II 2007-01, Social Science Research Center Berlin (WZB).
  11. Konrad, Kai A., 2010. "Information alliances in contests with budget limits," Discussion Papers, Research Professorship & Project "The Future of Fiscal Federalism" SP II 2010-21, Social Science Research Center Berlin (WZB).

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