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Cooperation and Distributive Conflict

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  • Ralph-C Bayer

    () (School of Economics, University of Adelaide)

Abstract

If either property rights or institutions are weak, agents who create wealth by cooperating will later have an incentive to fight over the distribution of it. In this paper we investigate theoretically and experimentally the circumstances under which welfare losses from investment in distributional contests destroy welfare gains from voluntary cooperation. We find that in situations, where the return to cooperation is high, subjects cooperate strongly and welfare exceeds the predicted non-cooperation levels. If returns to cooperation are low, then subjects still cooperate, but the resources wasted in the distributional conflict lead to lower welfare than if subjects had followed the theoretical prediction of not cooperating.

Suggested Citation

  • Ralph-C Bayer, 2015. "Cooperation and Distributive Conflict," School of Economics Working Papers 2015-04, University of Adelaide, School of Economics.
  • Handle: RePEc:adl:wpaper:2015-04
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    File URL: https://economics.adelaide.edu.au/research/papers/doc/wp2015-04.pdf
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    References listed on IDEAS

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    More about this item

    Keywords

    Conflict; Cooperation; Contests; Experiments;

    JEL classification:

    • D74 - Microeconomics - - Analysis of Collective Decision-Making - - - Conflict; Conflict Resolution; Alliances; Revolutions
    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior

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