Why Can’t We Be Friends? Entitlements, Bargaining, and Conflict
25 Pages Posted: 10 Jun 2012
Date Written: May 26, 2012
We design an experiment to explore the impact of earned entitlements on the frequency and intensity of conflicts in a two-stage bargaining and conflict game with side-payments. In this game, residents (Proposers) make side-payment offers and contestants (Responders) decide whether to accept the offers and whether to engage in a conflict. When subjects earn their roles, conflicts are 44% more likely to be avoided than when roles are assigned randomly. Earned rights impact behavior in three important ways: (1) residents who have earned their position persistently offer larger side-payments; (2) larger offers lead to a lower probability of conflict, but (3) residents whose offers do not lead to conflict resolution respond spitefully and exhibit greater conflict expenditure. Hence, with earned rights, the positive welfare effects of reduced conflict frequency are offset by higher conflict intensity.
Keywords: contests, conflict resolution, side-payments, entitlements, experiments
JEL Classification: C72, C91, D72
Suggested Citation: Suggested Citation