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Vendettas

Author

Listed:
  • Friedel Bolle
  • Jonathan H. W. Tan
  • Daniel John Zizzo

Abstract

Vendettas occur in many real-world settings where rivals compete for a prize, e.g., winning a competitive promotion or retaining a job, by engaging in aggressive, retaliatory behavior. We present a benchmark experiment where two players have an initial probability of winning a prize. Retaliatory vendettas occur and lead subjects to the worst possible outcomes in 2/3 of cases, counter to self-interest predictions, with large inefficiencies even in the absence of any immediate gain from aggression. Negative emotions are important and interact with the economic setting to produce large social inefficiencies. Allowing cooling off periods reduces aggression.

Suggested Citation

  • Friedel Bolle & Jonathan H. W. Tan & Daniel John Zizzo, 2014. "Vendettas," American Economic Journal: Microeconomics, American Economic Association, vol. 6(2), pages 93-130, May.
  • Handle: RePEc:aea:aejmic:v:6:y:2014:i:2:p:93-130
    Note: DOI: 10.1257/mic.6.2.93
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    References listed on IDEAS

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    More about this item

    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • D74 - Microeconomics - - Analysis of Collective Decision-Making - - - Conflict; Conflict Resolution; Alliances; Revolutions

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