Vendettas

American Economic Journal: Microeconomics (Forthcoming)

44 Pages Posted: 13 Apr 2013

See all articles by Friedel Bolle

Friedel Bolle

European University Viadrina Frankfurt (Oder)

Jonathan H. W. Tan

Nottingham University Business School

Daniel John Zizzo

University of Queensland - School of Economics

Date Written: April 11, 2013

Abstract

Vendettas occur in many real world settings where rivals compete for a prize, e.g., winning a competitive promotion or retaining a job, by engaging in aggressive retaliatory behavior. We present a benchmark experiment where two players have an initial probability of winning a prize. Retaliatory vendettas occur and lead subjects to the worst possible outcomes in 2/3 of cases, counter to self-interest predictions, with large inefficiencies even in the absence of any immediate gain from aggression. Negative emotions are important and interact with the economic setting to produce large social inefficiencies. Allowing cooling off periods reduces aggression.

Keywords: conflict, vendetta, spite, anger, emotions, cooling off

JEL Classification: C72, C91, D03

Suggested Citation

Bolle, Friedel and Tan, Jonathan H. W. and Zizzo, Daniel John, Vendettas (April 11, 2013). American Economic Journal: Microeconomics (Forthcoming), Available at SSRN: https://ssrn.com/abstract=2248645

Friedel Bolle

European University Viadrina Frankfurt (Oder) ( email )

Lehrstuhl Volkswirtschaftslehre Insbesondere Wirtschaftstheorie
D-15207 Frankfurt (Oder)
Germany

Jonathan H. W. Tan

Nottingham University Business School ( email )

Jubilee Campus
Wollaton Road
Nottingham, NG8 1BB
United Kingdom

Daniel John Zizzo (Contact Author)

University of Queensland - School of Economics ( email )

St Lucia
Brisbane, Queensland 4072
Australia

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