Endogenous Group Formation in Experimental Contests


Luisa Herbst, Kai A. Konrad, and Florian Morath

Why would anyone refrain from joining an alliance in an upcoming conflict? Because “the strong man is the strongest when alone,” as William Tell in Friedrich Schiller’s eponymous book puts it. Is that true and who wants to form an alliance nonetheless, and why? In a recently published paper, economists from the Institute used an experimental approach to study alliance formation in contests or in conflict more generally, and discovered the following:

Weakly motivated players have an incentive to enter into an alliance and to free ride on the effort of strongly motivated players. Players who are willing to expend high effort correctly anticipate that they will be exploited in an alliance and prefer to stand alone. In line with the behavioural choice of Schiller’s protagonist, strong players win with a higher-than-average probability when standing alone, while they gain a much lower expected resource share when in an alliance. Furthermore, the way in which alliances are formed has consequences for the effort provision. In line with theories of in-group favouritism, and despite the self-selection of weak players into alliances, players in voluntarily formed alliances mobilise more resources than players who were forced into an alliance. This effort increase in voluntarily formed alliances is largest for strong players who actually voted against alliance formations; these players anticipate the lower effort of their fellow alliance members and strongly increase their own effort.  

Veröffentlichung:   Endogenous Group Formation in Experimental Contests, European Economic Review, 2015, 74, S. 163–189