How Alliances Form and Conflict Ensues

59 Pages Posted: 28 Jul 2021

See all articles by Lu Dong

Lu Dong

University of Nottingham - School of Economics

Lingbo Huang

Nanjing Audit University

Jaimie W. Lien

The Chinese University of Hong Kong (CUHK) - Department of Decision Sciences & Managerial Economics

Jie Zheng

Tsinghua University - School of Economics & Management

Date Written: July 22, 2021

Abstract

In a social network in which friendly and rival bilateral links can be formed, how do alliances between decision-makers form, and what determines whether a conflict will arise? We study a network formation game between ex-ante symmetric players in the laboratory to examine the dynamics of alliance formation and conflict evolution. A peaceful equilibrium yields the greatest social welfare, while a successful bullying attack transfers the victimized player’s resources evenly to the attackers at a cost. Consistently with the theoretical model predictions, peaceful and bullying outcomes are prevalent among the randomly re-matched experimental groups, based on the cost of attack. We further examine the dynamics leading to the final network and find that groups tend to coordinate quickly on a first target for attack, while the first attacker entails a non-negligible risk of successful counter-attack by initiating the coordination. These findings provide insights for understanding social dynamics in group coordination.

Keywords: network formation, conflict, alliance, bully, peace

JEL Classification: C72, C92, D74, D85, F51

Suggested Citation

Dong, Lu and Huang, Lingbo and Lien, Jaimie W. and Zheng, Jie, How Alliances Form and Conflict Ensues (July 22, 2021). Available at SSRN: https://ssrn.com/abstract=3893024 or http://dx.doi.org/10.2139/ssrn.3893024

Lu Dong

University of Nottingham - School of Economics ( email )

University Park
Nottingham, NG7 2RD
United Kingdom

Lingbo Huang

Nanjing Audit University ( email )

86 Yushan W Rd
Pukou, Jiangsu 210017
China

Jaimie W. Lien (Contact Author)

The Chinese University of Hong Kong (CUHK) - Department of Decision Sciences & Managerial Economics ( email )

Shatin, N.T.
Hong Kong

Jie Zheng

Tsinghua University - School of Economics & Management ( email )

Beijing, 100084
China

HOME PAGE: http://jzheng.weebly.com/

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