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Alliances in the Shadow of Conflict

  • Changxia Ke
  • Kai A. Konrad
  • Florian Morath

Victorious alliances often fight about the spoils of war. We consider experimentally when members of victorious alliances accept a peaceful division of the spoils, and when they fight against each other, and how the inability to commit to a peaceful division affects their effort contributions in their fight against a common enemy. First, we find that an asymmetric split of the prize induces a higher likelihood of internal fight and, in turn, reduces the effort contributions in the fight against a joint enemy. Second, non-binding declarations on how to divide the spoils in case of victory do not help to mitigate the hold-up problem.

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File URL: http://www.tax.mpg.de/RePEc/mpi/wpaper/Tax-MPG-RPS-2012-03.pdf
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Paper provided by Max Planck Institute for Tax Law and Public Finance in its series Working Papers with number alliances_in_the_shadow_of_conflict.

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Length: 41 pages
Date of creation: Mar 2012
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Handle: RePEc:mpi:wpaper:alliances_in_the_shadow_of_conflict
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