Rent seeking in groups

Brothers in arms – An experiment on the alliance puzzle

“…First, in the competition between the alliance and its adversaries, the members of the alliance face a freerider problem as their contributions to the …ghting e¤ort in the inter-alliance competition are to some extent contributions to a public good (Olson and Zeckhauser 1966). 2 The members of an alliance -the brothers in armsall bene…t from a higher collective …ghting e¤ort. But each member should prefer the additional e¤ort to be expended by other members of his group.…”

Fight Alone or Together? The Need to Belong

“…Second, in literature that investigates group contests, Ahn et al (2011) compare individualindividual contests, group-group contests, and individual-group contests, …nding over-dissipation in all of them such that they reject "the paradox of group size" proposed by Olson (1965). Sheremeta and Zhang (2010) compare e¤ort choices in individual contests to those in group contests (with intra-group communica-tion and joint decision-making) and …nd that group-chosen e¤orts are much lower than individual e¤ort, which they explain by asserting that groups are more riskaverse than individuals.…”

Alliances in the Shadow of Conflict

“…In case the alliance of A and B wins the competition, then players A and B have to choose between two possible options about how the prize should be divided among them: 1 The original instructions distributed to the participants were in German. 4. Your role in the experiment will be either that of player A, B, or C. This role will be randomly assigned to you.…”

“…Several reasons for why countries may end up in a violent …ght rather than …nd a less wasteful negotiation outcome are clearly outlined in the survey by Jackson and Morelli (2011). 4 A fundamental question concerns the relation between balance of power and the emergence of con ‡ict (Organski 1958, Claude 1962, Blainey 1988, Wagner 1994); some theories suggest that the distribution of power matters for the allocation outcome, but does not have a strong impact on the probability of …ghting (Wittman 1979). Alliances are considered to play an important role for the probability of resourcewasteful …ghting.…”

“…In the experiment, if the alliance wins against a joint adversary, the alliance members earn a prize of victory but need to determine how to share this prize, and they are given two options: They can either split the prize according to an exogenous rule or decide to break up and 3 Similar problems also emerge where …rms may team up and form a research joint venture in a patent contest, but then have to decide how to position themselves when marketing the product they have jointly innovated. 4 These include incomplete information (see Fearon 1995 for a detailed account), commitment problems (e.g., Gar…nkel and Skaperdas 2000, Beviá and Corchón 2010), and equilibrium selection in frameworks with multiple equilibria (e.g., Slantchev 2003 andKonrad andLeininger 2011). 5 Studies such as Levy (1981) highlight the diversity of alliances.…”