In two sets of novel laboratory experiments, we show that the mere presence of an existing alliance at the onset of coalition formation may lead managers to form economically suboptimal alliances. Study Set 1 considers alliance formation when a focal firm is already embedded in an existing coalition. These studies show evidence of a status quo bias: participants managing the focal firm tend to include the current partner in alliance offers and thus are less successful in forming optimal alliances compared to those in an unattached control condition. Study Set 2 examines the extent to which an unattached focal firm attempts to ‘poach’ away attractive coalition partners from their embedded alliances. Our results show evidence of poaching avoidance: participants make fewer offers to, and are less likely to partner with, an attractive firm already in an alliance. However, this tendency to avoid poaching may be attenuated when the existing coalition is perceived as a powerful threat and/or alternate partners are unavailable. These findings provide behavioral insights into how judgmental biases can constrain alliance formation. We conclude with a discussion of how selected environmental, firm, and decision-maker characteristics (e.g., turbulence, embedded relationships, and risk orientation) may moderate these results.

Recently, there has been a Renaissance for multi-level selection models to explain the persistence of unselfish behavior in social dilemmas, in which assortative/correlated matching plays an important role. In the current study of a multi-round prisoners’ dilemma experiment, we introduce two correlated matching procedures that match subjects with similar action histories together. We discover significant treatment effects, compared to the control procedure of random matching. Particularly with the weighted history matching procedure we find bifurcations regarding group outcomes. Some groups converge to the all-defection equilibrium even more pronouncedly than the control groups do, while other groups generate much higher rate of cooperation, which is also associated with higher relative reward for a typical cooperative action. All in all, the data show that cooperation does have a much better chance to persist in a correlated/assortative-matching environment, as predicted in the literature.

We experimentally investigate the effect of time pressure from deadlines in a rich-context bargaining game with an induced reference point at the 2/3-1/3 distribution. Our results show that first proposals, concessions, and settlements are very similar for different time-pressure levels. Nevertheless, time pressure systematically influences the type of agreements reached: the likelihood of bargainers reaching agreements on the equal split is lower under time pressure. Furthermore, disagreements and last-moment-agreements (conditional on reaching an agreement) are more frequently observed under time pressure, though the effect on last-moment agreements disappears when disagreements are included in the analysis. Finally, the effect of time-pressure on the frequency of disagreements is stronger for those pairs with higher tension in first proposals.

We use a human-subjects experiment to investigate how bargaining outcomes are affected by changes in bargainers’ disagreement payoffs. Subjects bargain against changing opponents, with randomly drawn asymmetric disagreement outcomes that vary over plays of the game, and with complete information about disagreement payoffs and the cake size. We find that subjects only respond about half as much as theoretically predicted to changes in their own disagreement payoff and to changes in their opponent’s disagreement payoff. This effect is observed in a standard Nash demand game and a related unstructured bargaining game, in both early and late rounds, and is robust to moderate changes in stake sizes. We show theoretically that standard models of expected utility maximisation are unable to account for this under-responsiveness, even when generalised to allow for risk aversion. We also show that quantal-response equilibrium has, at best, mixed success in characterising our results. However, a simple model of other-regarding preferences can explain our main results.

We experimentally investigate the effects of conflict budget on conflict intensity. We run a between-subjects Tullock contest in which we vary the contest budget from Low to Medium to High, while keeping the risk-neutral Nash equilibrium bid the same. We find a non-monotonic relationship: bids increase when the budget increases from Low to Medium, but decrease when the budget further increases from Medium to High. This can happen for players with concave utility, if a high budget has a wealth effect that reduces the marginal utility of winning resulting in lower bids. To test this, we run a Wealth treatment in which the budget remains the Medium, but contestants receive a fixed payment (as wealth) independent of the contest outcome. The bids in the Wealth treatment are lower than the Medium treatment, but are not different from the High treatment, supporting the hypothesis of a wealth effect. We then support this empirical observation by a theoretical model with risk-aversion.

Increasingly, arbitration is becoming used to resolve bargaining disputes in a variety of settings. Reducing dispute rates is often listed as a main goal in designing arbitration mechanisms. Conventional arbitration and final-offer arbitration are two commonly used procedures, but theoretical examinations of these arbitration procedures show that disputants’ final bargaining positions do not converge and disagreement is likely. This article contains results from a set of experiments designed to compare bargaining outcomes under the two commonly used arbitration procedures with outcomes under an innovative procedure called “double-offer” arbitration (Zeng et al., 1996). This procedure requires that disputants make two final offers at impasse: a primary and a secondary offer. The arbitrator evaluates the pairs of offers using a linear criterion function, and theory suggests the secondary offers converge to the median of the arbitrator's preferred settlement distribution. Because the procedure's rules are that convergence of offers generates a settlement at those offers, this theoretical convergence result implies that arbitration is not needed in the end. Experimental results indicate that dispute rates in double-offer arbitration are, on average, about the same as dispute rates in conventional arbitration. However, other results show reason to favor double-offer arbitration. Specifically, in repeated bargaining, there is concern over whether use of an arbitration procedure becomes addictive and makes bargainers more likely to use the procedure in the future-a “narcotic effect.” The data show that double-offer arbitration is non-addictive, whereas both conventional and final-offer arbitration are.

We study learning and selection and their implications for possible effort escalation in a simple game of dynamic property rights conflict: a multi-stage contest with random resolve. Accounting for the empirically well-documented heterogeneity of behavioral motives of players in such games turns the interaction into a dynamic game of incomplete information. In contrast to the standard benchmark with complete information, the perfect Bayesian equilibrium features social projection and type-dependent escalation of efforts caused by learning. A corresponding experimental setup provides evidence for type heterogeneity, for belief formation and updating, for self-selection and for escalation of efforts in later stages.

Abundant evidence suggests that high levels of contributions to public goods can be sustained through self-governed monitoring and sanctioning. This experimental study investigates the effectiveness of decentralized sanctioning institutions in alternative punishment networks. Our results show that the structure of punishment network significantly affects allocations to the public good. In addition, we observe that network configurations are more important than punishment capacities for the levels of public good provision, imposed sanctions and economic efficiency. Lastly, we show that targeted revenge is a major driver of anti-social punishment.

We analyze a bargaining protocol recently proposed in the literature vis-à-vis unconstrained negotiation. This new mechanism extracts “gains from trade” inherent in the differing valuation of two parties towards various issues where conflict exists. We assess the role of incomplete vs. complete information in the efficiency achieved by this new mechanism and by unconstrained negotiation. We find that unconstrained negotiation does best under a situation of complete information where the valuations of both bargaining parties are common knowledge. Instead, the newly proposed mechanism does best in a situation with incomplete information. The sources of inefficiencies in each of the two cases arise from the different strategic use of the available information.

This paper presents a laboratory collective resistance (CR) game to study how different forms of non-binding communication among responders can help coordinate their collective resistance against a leader who transgresses against them. Contrary to the predictions of analysis based on purely self-regarding preferences, we find that non-binding communication about intended resistance increases the incidence of no transgression even in the one-shot laboratory CR game. In particular, we find that the incidence of no transgression increases from 7 percent with no communication up to 25-37 percent depending on whether communication occurs before or after the leader's transgression decision. Responders’ messages are different when the leaders can observe them, and the leaders use the observed messages to target specific responders for transgression.

We report experimental evidence showing a positive effect of redistribution on economic efficiency via the self-enforcement of property rights, and identify which status groups benefit more and which less. We model an economy in which wealth is produced if players voluntarily comply with the—efficient but inequitable—prevailing social order. We vary exogenously whether redistribution is feasible, and how it is organized. We find that redistribution benefits all status groups as property disputes recede. It is most effective when transfers are not discretionary but instead imposed by some exogenous administration. In the absence of coercive means to enforce property rights, it is the higher status groups, not the lower status groups, who benefit from redistribution being compulsory rather than voluntary.

We study the effectiveness of costly rewards in mitigating excess extraction in a standard Common Pool Resource (CPR) game experiment. We implement two treatments. In the first, rewards are a pure transfer from one player to the other. In the second, the benefits of receiving a reward are higher than the cost of providing it. Referring to the latter as “net positive” rewards, we observe that these are used more frequently than transfer rewards, and that, unlike transfer rewards, they are effective in sustaining cooperation in the CPR game.

Does political polarization lead to dysfunctional behavior? To study this question, we investigate the attitudes of supporters of Donald Trump and of Hillary Clinton towards each other and how these attitudes affect spiteful behavior. We find that both Trump and Clinton supporters display less positive attitudes towards the opposing supporters compared to coinciding supporters. More importantly, we show that significantly more wealth is destroyed if the opponent is an opposing voter. This effect is mainly driven by Clinton voters. This provides the first experimental evidence that political polarization leads to destructive behavior.

In oligopoly, imitating the most successful competitor yields very competitive outcomes. This theoretical prediction has been confirmed experimentally by a number of studies. A recent paper by Friedman et al. (J Econ Theory 155:185–205, 2015) qualifies those results in an interesting way: While they replicate the very competitive results for the first 25–50 periods, they show that when using a much longer time horizon of 1200 periods, results slowly turn to more and more collusive outcomes. We replicate their result for duopolies. However, with 4 firms, none of our oligopolies becomes permanently collusive. Instead, the average quantity always stays above the Cournot–Nash equilibrium quantity. Thus, it seems that “four remain many” even with 1200 periods.

Cooperation motives are traditionally elicited in experimental games where players have misaligned interests that yield noncooperation in equilibrium. Research finds a typology of behavioral types such as free riders and conditional cooperators. However, intrinsic motives in conflict settings such as appeasement, punishment, and greed are elusive in such games where noncooperation is the equilibrium prediction. To identify types in the dark side of human interaction, we apply hierarchical cluster analysis to data from the Vendetta Game, which has a payoff structure similar to public goods games but a dynamic move structure that yields cooperation in equilibrium. It allows us to observe diverse non-equilibrium conflict strategies, and to understand how feuds perpetuate. We relate our method and typology to other social dilemmas.

This empirical study extends the public choice literature on the allocation of death during war by examining the political economy of foreign fighter deaths in the Russo-Ukrainian War since the 24 February 2022 invasion. The study explores the roles played by various demographic factors, military institutions, and international trade relations in determining the number of foreign fighters from a variety of countries who have died in support of either Ukraine or Russia during the Russo-Ukrainian War. Unlike other related studies, this study also investigates the importance of, and finds evidence in support of, both economic freedom and a robust democracy in shaping the choices made by individuals around the globe to venture to, and die fighting on, the battlefields of Ukraine.

We show that the exposure to war-related violence increases the quantity of children temporarily, with permanent negative consequences for the quality of the current and previous cohorts. Our empirical evidence is based on Nepal, which experienced a 10 year long civil conflict of varying intensity. We exploit that villages affected by the conflict had the same trend in fertility as non-affected villages prior to the onset of conflict and employ a difference-in-differences estimator. We find that women in affected villages increased their fertility during the conflict by 19%, while child height-for-age declined by 10%. Supporting evidence suggests that the temporary fertility increase was the main pathway leading to reduced child height, as opposed to direct impacts of the conflict.

There is little research studying the effects of political violence on financial markets over decades, especially in an atmosphere where the violence manifested itself in heterogeneous and geographically widespread ways. This article examines the authoritarian edifice of Tsarist Russia in the nineteenth century to examine the way in which capital markets perceived political instability in a country which had paradoxically strong financial institutions but weak political ones. Using a novel database on political violence in Russia in the nineteenth century matched to monthly financial data from Russian equity markets, this article provides strong evidence that Russia's financial markets were negatively affected in the long run by political violence. Consistent with modern views of financial information, the effects of political violence were quickly incorporated into asset prices, but the specific magnitude of such violence was different depending on where the violence occurred and in what manner. Overall, it appeared that political violence was perceived very negatively by investors in Russian equity markets.

How do deported migrants engage in civic and political life after being forcibly returned to their home countries? Do experiences during the migration journey impact how deportees (re)engage? We explore how extortion experienced during migration alters political and civic engagement preferences. We utilize a multi-method approach combining original survey data of Guatemalans deported from the United States and a series of qualitative deportee interviews. We find that extortion during migration has a significant direct effect on increased citizen engagement. Economic hardship exacerbated by extortion may mediate this effect. Overall, extortion experienced while migrating has long-term financial consequences for deportees, with implications for their reintegration and the broader health of civic institutions in their home countries.

How stable are democracies? Building on Ghosal and Proto (2009, Journal of Public Economics, 93, 1078–1089), the conditions under which democracies are stable are analyzed. How these conditions relate to the threat of the rise of right wing populism poses to democracies is discussed.