 Endogenous alliances in survival contestsJournal of Economic Behavior & Organization, 2021, vol. 189, issue C, 337-358 Abstract: Esteban and Sákovics (2003) showed in their three-person game that an alliance never appears in a possibly multi-stage contest game for an indivisible prize when allies’ efforts are perfectly substitutable. In this paper, we introduce allies’ effort complementarity in alliances by using a CES effort aggregator function. We consider an open-membership alliance formation game followed by two contests: one played by alliances, and one within the winning alliance. We show that if allies’ efforts are too substitutable or too complementary, there is no meaningful alliance in equilibrium. However, if allies’ efforts are moderately complementary to each other, then competition between two alliances is a subgame perfect equilibrium, which Pareto-dominates the equilibrium in a no-alliance single-stage contest. We also show that if forming more than two alliances is supported in equilibrium, then it Pareto-dominates two-alliance equilibrium. Nevertheless, the parameter space for such an allocation to be supported as an equilibrium shrinks when the number of alliances increases. Keywords: Contest Theory; Alliance; Open-membership game; Effort complementarity; Coalition formation (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:jeborg:v:189:y:2021:i:c:p:337-358 DOI: 10.1016/j.jebo.2021.06.039 Access Statistics for this article Journal of Economic Behavior & Organization is currently edited by Houser, D. and Puzzello, D. More articles in Journal of Economic Behavior & Organization from Elsevier |
Is your work missing from RePEc? Here is how to contribute.
Questions or problems? Check the EconPapers FAQ or send mail to .
EconPapers is hosted by the
School of Business at Örebro University.