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Endogenous group formation in experimental contests

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  • Herbst, Luisa
  • Konrad, Kai A.
  • Morath, Florian

Abstract

We study endogenous group formation in tournaments employing experimental threeplayer contests. We find that players in endogenously formed alliances cope better with the moral hazard problem in groups than players who are forced into an alliance. Also, players who are committed to expending effort above average choose to stand alone. If these players are forced to play in an alliance, they invest even more, whereas their co-players choose lower effort. Anticipation of this exploitation may explain their preference to stand alone.

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  • Herbst, Luisa & Konrad, Kai A. & Morath, Florian, 2013. "Endogenous group formation in experimental contests," Discussion Papers, Research Unit: Economics of Change SP II 2013-301, WZB Berlin Social Science Center.
    • Handle: RePEc:zbw:wzbeoc:spii2013301
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    More about this item

    Keywords

    endogenous group formation; contest; conflict; alliance; experiment; moral hazard problem; free-riding; in-group favoritis;
    All these keywords.

    JEL classification:

    • 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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