Teilprojekt A2

Teilprojektleiter: Kai A. Konrad

Thema des Teilprojekts A2:

Konflikte in Organisations- und Steuerungsproblemen – die Rolle von Allianzen

Max Planck Institute for Intellectual Property, Competition and Tax Law

Economics: structure of the alliance problem

Max Planck Institute for Intellectual Property, Competition and Tax Law {A} wins

{B,C} wins

C wins

B winsInter-alliance

contest{A} between {B,C}

Intra-alliance contest:

Dissipation of a share in the

prize

Collective Action Problem

Hold-up Problem

Result (Esteban & Sakovics 2003):

Each player in the alliance would rather prefer to be in the position of player A than in an alliance with another player, and the alliance members would rather like to resolve the alliance.

Max Planck Institute for Intellectual Property, Competition and Tax Law

The Economic View:

1. Due to dissipation in the intra-alliance contest, the alliance fights about a lower prize.

2. Members of the alliance contribute to a group specific public good when they choose their fighting efforts in the inter-alliance contest.

Some Support from Political Science

“Among victors, alliances have tended to dissolve at the peace table in quarrels over the spoils."

(Laurence Beilenson (1969, the Treaty Trap: A History of the Performance of Political Treaties by the United States and European Nations, Washington D.C., Public Affairs Press; cited in Starr 1972, p.26):

Max Planck Institute for Intellectual Property, Competition and Tax Law

Historical Example: Second World War

Axis wins

Alliance wins

C wins

B wins

World War II

…Yalta Conference, Potsdam Conference…

Wikimedia Commons

+ Cold War

http://commons.wikimedia.org/wiki/File:Yalta_Conference_cropped.jpg

The alliance puzzle – a contrasting view from psychology

Belonging to an alliance is considered to be a good thing.

"What appears less debatable is the severe competitive disadvantage of the lone individual confronting a group when both want the same resource. When other people are in groups, it is vital to belong to a group oneself, particularly in a group of familiar, cooperative people who care about one's welfare."

(p. 499 in: Roy Baumeister and Mark R. Leary, 1995, The need to belong: Desire for interpersonal attachments as a fundamental human motivation, Psychological Bulletin, 117 (3), 497-529.

Max Planck Institute for Intellectual Property, Competition and Tax Law

Research agenda:

Max Planck Institute for Intellectual Property, Competition and Tax Law Understanding alliances:

What are the reasons for alliance formation?

Are alliances good or bad – and for whom?

Alliances are instruments. But what for?

Research agenda:

Theoretical considerations (examples):

Alliances as information exchange institutions

Alliances as commitment devices?

The role of conflict technology

The role of budget constraints?

Preventive alliance formation (e.g., to avoid military conflict)

Dynamics of alliance formation and resolution

Max Planck Institute for Intellectual Property, Competition and Tax Law

Research agenda:

Some preliminary experimental questions:

Exogenous alliances:

Is there a “brothers-in-arms” effect?

Is there an information effect?

Is there a deterrence effect?

Endogenous alliance formation or breakup:

Do players prefer an alliance or to stand alone?

Does endogeneity of the alliance matter for the “brothers-in-arms” effect?

What factors influence the “brothers-in-arms” effect?

Max Planck Institute for Intellectual Property, Competition and Tax Law