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Resources for Conflict: Constraint or Wealth?

Author

Listed:
  • Kyung Hwan Baik

    (Sungkyunkwan University)

  • Subhasish M. Chowdhury

    (University of East Anglia)

  • Abhijit Ramalingam

    (University of East Anglia)

Abstract

We investigate the effects of the availability of resources that can be expended in conflict on conflict intensity. We run a between-subjects Tullock contest in which we vary the contest budget from Low to Medium to High, while keeping the Nash equilibrium bid the same. We find an `inverted U-shaped' relationship between resource availability and conflict intensity. While standard error correction models can explain the first part of the relationship by attributing resources as constraint, they do not apply in the latter part. We further run a Wealth treatment in which the budget remains Medium, but a fixed payment independent of the contest outcome is provided. The level of conflict in the Wealth and the High treatment are not different, implying a wealth effect through available resources. We conclude that the resources for conflict can have both a constraint as well as a wealth effect. When initial resources are scarce, they act as a constraint. As more resources become available the constraint loosens up and conflict intensity increases. However, when resources are abundant, they are viewed as wealth and conflict intensity decreases. Hence, the availability of additional resources reduces the marginal benefit from winning as well as conflict intensity.

Suggested Citation

  • Kyung Hwan Baik & Subhasish M. Chowdhury & Abhijit Ramalingam, 2014. "Resources for Conflict: Constraint or Wealth?," University of East Anglia Applied and Financial Economics Working Paper Series 061, School of Economics, University of East Anglia, Norwich, UK..
  • Handle: RePEc:uea:aepppr:2012_61
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    References listed on IDEAS

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    Cited by:

    1. Subhasish M. Chowdhury & Peter G. Moffatt, 2015. "Overbidding and heterogeneous behavior in contest experiments: A comment on the endowment effect," Working Paper series, University of East Anglia, Centre for Behavioural and Experimental Social Science (CBESS) 15-17, School of Economics, University of East Anglia, Norwich, UK..
    2. Einav Hart & Judith Avrahami & Yaakov Kareev, 2016. "Enlarging the market yet decreasing the profit: An experimental study of competitive behavior when investment affects the prize," Judgment and Decision Making, Society for Judgment and Decision Making, vol. 11(4), pages 380-390, July.
    3. Chowdhury, Subhasish M. & Jeon, Joo Young & Ramalingam, Abhijit, 2016. "Identity and group conflict," European Economic Review, Elsevier, vol. 90(C), pages 107-121.

    More about this item

    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • D74 - Microeconomics - - Analysis of Collective Decision-Making - - - Conflict; Conflict Resolution; Alliances; Revolutions

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