The All-Pay Auction with Complete Information and Identity-Dependent Externalities

Klose, Bettina Susanne; Kovenock, Dan

doi:10.2139/ssrn.2252709

Cited by 9 publications

(6 citation statements)

References 24 publications

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“…This area of theoretical research is extended by Esteban and Ray (1999), Klose and Kovenock (2015a, b) and Bagchi et al (2019). Esteban and Ray (1999) identity dependent externality with an all-pay auction contest success function.…”

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confidence: 99%

The Economics of Identity and Conflict

Chowdhury¹

2021

Oxford Research Encyclopedia of Economics and Finance

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Conflicts are a ubiquitous part of our life. One of the main reasons behind the initiation and escalation of conflict is the identity, or the sense of self, of the engaged parties. It is hence not surprising that there is a consistent area of academic literature that focuses on identity, conflict, and their interaction. This area models conflicts as contests and focuses on the theoretical, experimental, and empirical literature from economics, political science, and psychology. The theoretical literature investigates the behavioral aspects—such as preference and beliefs—to explain the reasons for and the effects of identity on human behavior. The theoretical literature also analyzes issues such as identity-dependent externality, endogenous choice of joining a group, and so on. The applied literature consists of laboratory and field experiments as well as empirical studies from the field. The experimental studies find that the salience of an identity can increase conflict in a field setting. Laboratory experiments show that whereas real identity indeed increases conflict, a mere classification does not do so. It is also observed that priming a majority–minority identity affects the conflict behavior of the majority, but not of the minority. Further investigations explain these results in terms of parochial altruism. The empirical literature in this area focuses on the various measures of identity, identity distribution, and other economic variables on conflict behavior. Religious polarization can explain conflict behavior better than linguistic differences. Moreover, polarization is a more significant determinants of conflict when the winners of the conflict enjoy a public good reward; but fractionalization is a better determinant when the winners enjoy a private good reward. As a whole, this area of literature is still emerging, and the theoretical literature can be extended to various avenues such as sabotage, affirmative action, intra-group conflict, and endogenous group formation. For empirical and experimental research, exploring new conflict resolution mechanisms, endogeneity between identity and conflict, and evaluating biological mechanisms for identity-related conflict will be of interest.

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confidence: 99%

The Economics of Identity and Conflict

Chowdhury¹

2021

Oxford Research Encyclopedia of Economics and Finance

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“…Such identity‐dependent externalities have been discussed for all‐pay auctions by Konrad () and by Klose and Kovenock ().…”

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confidence: 88%

To Deter or to Moderate? Alliance Formation in Contests With Incomplete Information

Konrad

Morath

2017

Economic Inquiry

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We consider two players' choice about the formation of an alliance ahead of conflict in a framework with incomplete information about the strength of the potential ally. When deciding on alliance formation, players anticipate the self‐selection of other players and the informational value of own and other players' choices. In the absence of these signaling effects, strong players have an incentive to stand alone, which leads to a separating equilibrium. This separating equilibrium can be destabilized by deception incentives if beliefs are updated on the basis of endogenous alliance formation choices. Weak players may find it attractive to appear strong in order to deter competitors from positive effort choices. Strong players may find it attractive to appear weak in order to give their competitors a false sense of security and then beat them with little effort. Moreover, appearing weak allows players to free‐ride when alliances are formed. (JEL D72, D74)

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“…Externalities recently have been a focus of the conflict literature. Identity dependent externalities have been considered in the case of Tullock contest by Linster (1993) and in the case of all-pay auctions by Klose and Kovenock (2015). Faria et al (2017) analyze two types of externalities -temporal and spatial -in a dynamic game between two national governments that fight a common terrorist organization.…”

Section: Related Literaturementioning

confidence: 99%

A model of a multilateral proxy war with spillovers

2018

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Motivated by the war in Syria and the ascension of ISIS, this paper models a proxy war with three sponsors and three combatants as a dynamic game. Sponsors are leaders that provide resources for combatants to fight each other. Sponsors 1 and 2 have strong aversion to sponsor 3's proxy, but not against each other. Three pure strategy equilibria exist in the game. When the ex post value of winning is small, all players fight in equilibrium. However, when the ex post value of winning is large, in equilibrium either sponsors 1 and 2 coordinate their actions, with one of them staying out of the contest, or sponsor 3 does not participate. The probability of winning and the sponsors' payoffs depend on a spillover effect. We find that no unique way of characterizing the comparative statics of the spillover effect emerges and that the answer varies from one equilibrium to another.Finally, we identify conditions under which sponsors 1 and 2 would want to form an alliance.Alawite and Druze, who comprise 16% of the population), plus Christians (10% of the population); different ethnic groups -both Arab (90%) and non-Arab (10%); 6 and three broad political groups -the pro-establishment dictatorship of the Baath party, democrats, and Islamic fundamentalists.Each of those combatant groups has one or more sponsors: the United States and western allies, supporting political opposition to the Syrian Assad regime (who they assume think like western liberals); Russia and Iran, supporting the Assad regime (which is thought to represent Syrian Shia, Allawite, Druze, and Christians); and, finally, a loose army of international Muslim Sunni volunteers (an important part composed of Muslim Europeans), supporting and fighting for ISIS.Syria clearly is plagued by communal cleavages. Throughout its history Syria never was an independent country with a uniform ethnic-religious-political composition. After its independence from France in 1946 it struggled to find an identity. The Baath party gave Syria a much needed identity, with an ideology that is a mixture of Arab nationalism and socialism. It has a Bolshevik type of organization that permeates all regions, cities, villages, institutions and groups of Syrian society. The Baath party and the army are the only institutions that allowed a significant share of Syrian society the opportunity for social mobility, in particular for religious minorities, such as the Allawites, which ended up forming the Army's elite.General Hafiz al-Assad's 30-year dictatorship was able to consolidate power because Assad had political influence inside the Baath party and control of the Army (Hinnebusch 2014).The only major segment of Syrian society that was not under governmental influence was the poor Sunni majority, profoundly influenced by the Islamic fundamentalism of the Muslim Brotherhood

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The All-Pay Auction with Complete Information and Identity-Dependent Externalities

Cited by 9 publications

References 24 publications

The Economics of Identity and Conflict

The Economics of Identity and Conflict

To Deter or to Moderate? Alliance Formation in Contests With Incomplete Information

A model of a multilateral proxy war with spillovers

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