Conflict and Competition over Multi-Issues

António Osório

The B.E. Journal of Theoretical Economics, 2018, vol. 18, issue 2, 17

Abstract: Real life disputes, negotiations and competitive situations involve multi-issue considerations in which the final outcome depends on the aggregated effort over several dimensions. We consider two allocation systems, the I-system, in which each issue is disputed and award independently, and the A-system, in which all issues are aggregate in a single prize award. In the A-system, we propose a contest success function that aggregates the individuals’ multi-issue efforts in a single outcome. Among other results, we found that the A-system tends to induce higher total effort than the I-system. The model is also able to reproduce a large set of strategic behaviors. For instance, under decreasing returns to effort, individuals maximize their payoffs by distributing effort over all issues, while under increasing returns to effort, individuals focus on a single issue. Hybrid equilibria, in which one individual focus in a single issue while the other individual diversifies effort over all issues, may also emerge when individuals hold different returns to effort. Strategic behavior is simultaneously influenced by the weight of each issue on the final outcome and by comparative advantages. Throughout the manuscript, we link our results with strategic behavior observed in electoral competition, i.e., “issue ownership”,“issue divergence/convergence”and“common value issues”. We expect that our findings will help researchers and practitioners to better understand the process of endogenous selection of issues in competitive contexts and to provide guidance in the implementation of the optimal allocation mechanism.

Keywords: contest success function; multi-issue competition; effort maximization; electoral competition (search for similar items in EconPapers)
JEL-codes: C72 D72 D74 D81 (search for similar items in EconPapers)
Date: 2018
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DOI: 10.1515/bejte-2016-0149

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