Brothers in Arms - An Experiment on the Alliance Puzzle

Our experimental analysis of alliances in conflicts leads to three main findings. First, even in the absence of repeated interaction, direct contact or communication, free-riding among alliance members is far less pronounced than what would be expected from non-cooperative theory. Second, this possible solidarity among ‘brothers in arms’ when fighting against an outside enemy may rapidly deteriorate or disappear as soon as the outside enemy disappears. Third, when fighting an outside enemy, ‘brothers in arms’ may already anticipate future internal conflict about dividing the spoils of winning; however, this subsequent internal conflict does not discourage alliance members from expending much effort in the contest against the external enemy.alliance, conflict, contest, free-riding, hold-up problem, solidarity

Brothers in arms: An experiment on the alliance puzzle

Our experimental analysis of alliances in conflicts leads to three main findings. First, even in the absence of repeated interaction, direct contact or communication, free-riding among alliance members is far less pronounced than what would be expected from non-cooperative theory. Second, this possible solidarity among brothers in arms when fighting against an outside enemy may rapidly deteriorate or disappear as soon as the outside enemy disappears. Third, when fighting an outside enemy, brothers in arms may already anticipate future internal conflict about dividing the spoils of winning; however, this subsequent internal conflict does not discourage alliance members from expending much effort in the contest against the external enemy. -- Unsere experimentelle Studie zu Allianzen in Konflikten führt zu drei Hauptergebnissen. Selbst ohne wiederholte Interaktion, direkten Kontakt oder Kommunikation zwischen den Teilnehmern ist das Trittbrettfahren der Mitglieder der Allianz viel weniger stark ausgeprägt, als es die nicht-kooperative Theorie erwarten lassen würde. Diese Solidarität zwischen den Kampfgefährten, die im Wettbewerb mit einem Außenstehenden zu beobachten ist, nimmt jedoch rapide ab, sobald der Gegner verschwunden ist. Im Kampf mit dem externen Gegner können die Kampfgefährten bereits damit rechnen, dass es zu einem internen Konflikt über die Aufteilung der Kriegsbeute kommen wird; dieser folgende interne Verteilungskonflikt hält die Mitglieder der Allianz jedoch nicht davon ab, einen hohen Einsatz im Kampf mit dem externen Gegner zu leisten.Alliance,conflict,contest,free-riding,hold-up problem,solidarity

Similarity and polarization in groups

"The focus of this paper is the endogenous formation of peer groups. We study a model in which agents choose their peers prior to making decisions on multiple issues. Agents differ in how much they value the decision outcomes on one issue relative to another. While each individual can collect information on at most one issue, all information is shared within the group. Thus, the group's preference composition affects the type of information that gets collected. We characterize stable groups, groups that are optimal for all their members. When information costs are low, stable groups must be sufficiently homogeneous. Furthermore, stability requires more similarity among extremists than among moderate individuals. When information costs are substantial, a free rider problem arises, and makes extreme peers more desirable, as they are more willing to invest in information acquisition. We show that, as information costs grow, polarization appears and becomes increasingly pronounced in stable groups." (author's abstract

Similarity and polarization in groups

The focus of this paper is the endogenous formation of peer groups. We study a model in which agents choose their peers prior to making decisions on multiple issues. Agents differ in how much they value the decision outcomes on one issue relative to another. While each individual can collect information on at most one issue, all information is shared within the group. Thus, the group's preference composition affects the type of information that gets collected. We characterize stable groups, groups that are optimal for all their members. When information costs are low, stable groups must be sufficiently homogeneous. Furthermore, stability requires more similarity among extremists than among moderate individuals. When information costs are substantial, a free rider problem arises, and makes extreme peers more desirable, as they are more willing to invest in information acquisition. We show that, as information costs grow, polarization appears and becomes increasingly pronounced in stable groups. --Homophily,Polarization,Group Formation,Information Collection

A strategic mediator who is biased into the same direction as the expert can improve information transmission

This note reconsiders communication between an informed expert and an uninformed decision maker with a strategic mediator in a discrete Crawford and Sobel (1982) setting. We show that a strategic mediator may improve communication even when he is biased into the same direction as the expert. The mediator improves communication, however, only if some information transmission is possible with unmediated communication. -- In dieser Note wird die Kommunikation zwischen einem informierten Experten, einem strategischen Mediator und einem uninformierten Prinzipal in einer diskreten Umgebung à la Crawford und Sobel (1982) untersucht. Wir zeigen, dass ein strategischer Mediator die Kommunikation sogar dann verbessern kann, wenn sein Bias und der Bias des Experten gleichgerichtet sind. Diese Verbesserung der Kommunikation setzt jedoch voraus, dass bereits die Kommunikation ohne Mediator Informationstransmission ermöglicht.Communication,Information,Cheap talk,Mediation

Experimental Research on Contests

Costly competitions between economic agents are modeled as contests. Researchers use laboratory experiments to study contests and test comparative static predictions of contest theory. Commonly, researchers find that participants’ efforts are significantly higher than predicted by the standard Nash equilibrium. Despite overbidding, most comparative static predictions, such as the incentive effect, the size effect, the discouragement effect and others are supported in the laboratory. In addition, experimental studies examine various contest structures, including dynamic contests (such as multi-stage races, wars of attrition, tug-of-wars), multi-dimensional contests (such as Colonel Blotto games), and contests between groups. This article provides a short review of such studies

Corruption and paradoxes in alliances

In order to study corruption when a person can adjudicate over property rights, we extend the Tullock contest model by letting identical workers and a non-productive enforcer, who is more effective at fighting, contest over a resource. Property rights for output are well defined, but it is not so for the resource. If the enforcer assigns the resource in the way he was mandated, then the grand coalition forms with no corruption. There is corruption if he colludes with a subset of the workers and gets a transfer; this coalition then fights over the resource against other groups of workers. For general cost effort functions, if the enforcer is effective enough and marginal productivity of labor is adequately low, addition of the enforcer to a coalition increases the sum of payoffs of its members and generates negative externalities on other coalitions; that is, to divide and rule becomes an attractive prospect. This matches the empirical association between corruption and labor productivity or income inequality

Fight Alone or Together? The Need to Belong

Alliances often face both free-riding and hold-up problems, which under- mine the effectiveness of alliances in mobilizing joint fighting effort. Despite of these disadvantages, alliances are still ubiquitous in all types of contests. This paper asks if there are non-monetary incentives to form alliances, e.g., intimidating/discouraging the single player(s) who is/are left alone. For this purpose, I compare symmetric (2 vs. 2) and asymmetric (2 vs. 1) contests to their equivalent 4-player and 3-player individual contests, respectively. We find that alliance players in symmetric (2 vs. 2) contests behave the same as those in equivalent 4-player individual contests. However, in asymmetric (2 vs. 1) contests, stand-alone players were strongly discouraged to exert effort (especially the females), compared to the 3-player individual contests. Alliance players may have anticipated this effect and also reduced their effort, if alliances share the prize according to the merit rule. Behavioural factors such as the need to belong can help reconcile the "paradox of alliance formation"

Exclusion in the all-pay auction: An experimental investigation

Contest or auction designers who want to maximize the overall revenue are frequently concerned with a trade-off between contest homogeneity and inclusion of contestants with high valuations. In our experimental study, we find that it is not profitable to exclude the most able contestant in favor of greater homogeneity among the remaining contestants, even if the theoretical exclusion principle predicts otherwise. This is because the strongest contestants considerably overexert. A possible explanation is that these contestants are afraid they will regret a low but risky bid if they lose and thus prefer a strategy which gives them a low but secure pay-off. -- Steht bei einer Auktion oder einem Turnier die Maximierung der Gesamtanstrengung aller Teilnehmer im Vordergrund, besteht ein Zielkonflikt zwischen der Homogenität der Teilnehmer und der Teilnahme ausgesprochen starker Wettbewerber. Aus der theoretischen Literatur ist das sogenannte Ausschlussprinzip bekannt, das besagt, dass der leistungsstärkste Agent aus einer Gruppe von Teilnehmern ausgeschlossen werden sollte, wenn das Leistungsgefälle zu groß ist. Dieses Prinzip wird einem experimentellen Test unterzogen. Es zeigt sich, dass sich der Ausschluss des stärksten Teilnehmers nie lohnt, da sich dieser weit über die Maßen anstrengt, sofern er an der Auktion teilnimmt. Die übermäßige Anstrengung ist umso prominenter, je überlegener der stärkste Teilnehmer gegenüber dem zweitstärksten ist. Dieses Verhalten kann mit einer Aversion gegenüber dem Gefühl des Bedauerns erklärt werden, das die stärksten Teilnehmer spüren, wenn sie sich weniger anstrengen und in Folge den Wettbewerb verlieren.experiments,contests,all-pay auction,heterogeneity,regret aversion

Alliances in the Shadow of Conflict

Victorious alliances often fight about the spoils of war. This paper presents an experiment on the determinants of whether alliances break up and fight internally after having defeated a joint enemy. First, if peaceful sharing yields an asymmetric rent distribution, this increases the likelihood of fighting. In turn, anticipation of the higher likelihood of internal fight reduces the alliance’s ability to succeed against the outside enemy. Second, the option to make non-binding declarations on non-aggression in the relationship between alliance members does not make peaceful settlement within the alliance more likely. Third, higher differences in the alliance players’ contributions to alliance effort lead to more internal conflict and more intense fighting