Alliances in the Shadow of Conflict

41 Pages Posted: 26 Mar 2012 Last revised: 4 Jul 2012

See all articles by Changxia Ke

Changxia Ke

Lingnan (University) College, Sun Yat-sen University

Kai A. Konrad

Max Planck Institute for Tax Law and Public Finance; Centre for Economic Policy Research (CEPR); CESifo (Center for Economic Studies and Ifo Institute for Economic Research); IZA Institute of Labor Economics

Florian Morath

Department of Public Finance, University of Innsbruck; Max Planck Institute for Tax Law and Public Finance

Multiple version iconThere are 3 versions of this paper

Date Written: February 2012

Abstract

Victorious alliances often fi…ght about the spoils of war. We consider experimentally when members of victorious alliances accept a peaceful division of the spoils, and when they fi…ght against each other, and how the inability to commit to a peaceful division affects their effort contributions in their fi…ght against a common enemy. First, we …find that an asymmetric split of the prize induces a higher likelihood of internal fi…ght 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.

Keywords: Conflict, contest, alliance, hold-up problem, experiment

JEL Classification: D72, D74

Suggested Citation

Ke, Changxia and Konrad, Kai A. and Morath, Florian, Alliances in the Shadow of Conflict (February 2012). Working Paper of the Max Planck Institute for Tax Law and Public Finance No. 2012-03, Available at SSRN: https://ssrn.com/abstract=2029085 or http://dx.doi.org/10.2139/ssrn.2029085

Changxia Ke (Contact Author)

Lingnan (University) College, Sun Yat-sen University ( email )

135 Xingang Xi Road
Guangzhou, Guangdong 510275
China

Kai A. Konrad

Max Planck Institute for Tax Law and Public Finance ( email )

Marstallplatz 1
Munich, 80539
Germany

HOME PAGE: http://www.tax.mpg.de/en/pub/home.cfm

Centre for Economic Policy Research (CEPR)

90-98 Goswell Road
London, EC1V 7RR
United Kingdom

CESifo (Center for Economic Studies and Ifo Institute for Economic Research)

Poschinger Str. 5
Munich, 81679
Germany

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, 53072
Germany

Florian Morath

Department of Public Finance, University of Innsbruck ( email )

Max Planck Institute for Tax Law and Public Finance ( email )

Marstallplatz 1
Munich, 80539
Germany

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