Resolving Conflicts by a Random Device
Erik O. Kimbrough
Simon Fraser University
Roman M. Sheremeta
Timothy W. Shields
Chapman University - George L. Argyros School of Business & Economics
November 14, 2012
Due to the high costs of conflict both in theory and practice, we examine and experimentally test the conditions under which conflict can be resolved via a random device. 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 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.
Number of Pages in PDF File: 33
Keywords: contest, conflict resolution, experiments
JEL Classification: C72, C91, D72, D74working papers series
Date posted: September 24, 2011 ; Last revised: November 15, 2012
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