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Vendettas

Friedel Bolle, Jonathan Tan () and Daniel Zizzo

American Economic Journal: Microeconomics, 2014, vol. 6, issue 2, 93-130

Abstract: Vendettas occur in many real-world settings where rivals compete for a prize, e.g., winning a competitive promotion or retaining a job, by engaging in aggressive, retaliatory behavior. We present a benchmark experiment where two players have an initial probability of winning a prize. Retaliatory vendettas occur and lead subjects to the worst possible outcomes in 2/3 of cases, counter to self-interest predictions, with large inefficiencies even in the absence of any immediate gain from aggression. Negative emotions are important and interact with the economic setting to produce large social inefficiencies. Allowing cooling off periods reduces aggression.

JEL-codes: C72 D74 (search for similar items in EconPapers)
Date: 2014
Note: DOI: 10.1257/mic.6.2.93
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Working Paper: Vendettas (2010) Downloads
Working Paper: Vendettas (2010) Downloads
Working Paper: Vendettas (2010) Downloads
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