Document Type
Article
Publication Date
2011
Abstract
We examine conflict resolution via a random device. We model conflict as a two-agent rent-seeking contest for a fixed prize. Before conflict arises, both agents may agree to allocate the prize by coin flip to avoid the costs of conflict. In equilibrium, risk-neutral agents with relatively symmetric conflict capabilities agree to resolve the conflict by randomization. However, with sufficiently asymmetric capabilities, conflicts are unavoidable because the stronger agent prefers to fight. Laboratory experiments confirm that the availability of the random device partially eliminates conflicts when agents are relatively symmetric; however, the device also reduces conflict between substantially asymmetric agents.
Recommended Citation
Kimbrough, E.O., Sheremeta, R.M., & Shields, T.W. (2011). Resolving conflicts by a random device. ESI Working Paper 11-09. Retrieved from http://digitalcommons.chapman.edu/esi_working_papers/99
Comments
Working Paper 11-09