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Resolving Conflicts by a Random Device

  • 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)

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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File URL: http://www.chapman.edu/ESI/wp/Sherementa-Shields_ResolvingConflictsbyRandomDevice.pdf
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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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  1. Davis, Douglas D & Reilly, Robert J, 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(1-2), pages 89-115, April.
  2. 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.
  3. Roman M. Sheremeta & Jingjing Zhang, 2009. "Can Groups Solve the Problem of Overbidding in Contests?," Department of Economics Working Papers 2009-05, McMaster University.
  4. Burkhard Hehenkamp & Wolfgang Leininger & Alex Possajennikov, 2003. "Evolutionary Equilibrium in Tullock Contests: Spite and Overdissipation," Discussion Papers in Economics 03_01, University of Dortmund, Department of Economics.
  5. Sheremeta, Roman M., 2010. "Experimental comparison of multi-stage and one-stage contests," Games and Economic Behavior, Elsevier, vol. 68(2), pages 731-747, March.
  6. Roman M. Sheremeta, 2011. "Contest Design: An Experimental Investigation," Economic Inquiry, Western Economic Association International, vol. 49(2), pages 573-590, 04.
  7. Gary Charness & Matthew Rabin, 2002. "Understanding Social Preferences With Simple Tests," The Quarterly Journal of Economics, MIT Press, vol. 117(3), pages 817-869, August.
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  9. 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.
  10. Wolfgang Leininger, 2003. "On evolutionarily stable behavior in contests," Economics of Governance, Springer, vol. 4(3), pages 177-186, November.
  11. 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.
  12. John Morgan & Henrik Orzen & Martin Sefton, 2012. "Endogenous entry in contests," Economic Theory, Springer, vol. 51(2), pages 435-463, October.
  13. 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.
  14. 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.
  15. Lisa R. Anderson & Beth A. Freeborn, 2008. "Varying the Intensity of Competition in a Multiple Prize Rent Seeking Experiment," Working Papers 75, Department of Economics, College of William and Mary.
  16. 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.
  17. Fonseca, Miguel A., 2009. "An experimental investigation of asymmetric contests," International Journal of Industrial Organization, Elsevier, vol. 27(5), pages 582-591, September.
  18. Urs Fischbacher, 2007. "z-Tree: Zurich toolbox for ready-made economic experiments," Experimental Economics, Springer, vol. 10(2), pages 171-178, June.
  19. Stefan Szymanski, 2003. "The Economic Design of Sporting Contests," Journal of Economic Literature, American Economic Association, vol. 41(4), pages 1137-1187, December.
  20. 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.
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