Alliances in the Shadow of Conflict

Abstract

Victorious alliances often fi…ght about the spoils of war. We consider experimentally when members of victorious alliances accept a peaceful division of the spoils, and when they fi…ght against each other, and how the inability to commit to a peaceful division affects their effort contributions in their fi…ght against a common enemy. First, we …find that an asymmetric split of the prize induces a higher likelihood of internal fi…ght and, in turn, reduces the effort contributions in the …fight against a joint enemy. Second, non-binding declarations on how to divide the spoils in case of victory do not help to mitigate the hold-up problem.

Keywords: Conflict, contest, alliance, hold-up problem, experiment

JEL Classification: D72, D74