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When Parity Promotes Peace: Resolving Conflict Between Asymmetric Agents

Listed author(s):
  • Erik O. Kimbrough

    (Department of Economics, Simon Fraser University)

  • Roman M. Sheremeta

    ()

    (Argyros School of Business & Economics, Chapman University)

  • Timothy W. Shields

    (Argyros School of Business & Economics, Chapman University)

Due to the high costs of conflict both in theory and practice, we examine and experimentally test the conditions under which conflict between asymmetric agents can be resolved. We model conflict as a two-agent rent-seeking contest for an indivisible prize. Before conflict arises, both agents may agree to allocate the prize by fair 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. The results of the experiment 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/research-and-institutions/economic-science-institute/_files/WorkingPapers/sheremeta-shields-when-parity-promotes-peace.pdf
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Paper provided by Chapman University, Economic Science Institute in its series Working Papers with number 13-20.

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Length: 40 pages
Date of creation: 2013
Handle: RePEc:chu:wpaper:13-20
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