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The Role of Noise in Alliance Formation and Collusion in Conflicts

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  • Boudreau, James W.
  • Sanders, Shane
  • Shunda, Nicholas

Abstract

Many real-world conflicts are to some extent determined randomly by noise. The way in which noise is modeled in contest success functions (CSFs) has has important implications both for the possibility of forming cooperative relationships as well as for the features of such relationships. In a one-shot conflict, we find that when noise is modeled as an exponential parameter in the CSF, there is a range of values for which an alliance between two parties can be beneficial, whereas that is not the case for an additive noise parameter. In an infinitely repeated conflict setting with additive noise, sustaining collusion via Nash reversion strategies is easier the more noise there is and more difficult the larger the contest's prize value, while an increase in the contest's number of players can make sustaining collusion either more or less difficult, all in marked contrast to the case of an exponential noise parameter. Which noise specification is appropriate is therefore an important consideration for modeling any conflict situation.

Suggested Citation

  • Boudreau, James W. & Sanders, Shane & Shunda, Nicholas, 2017. "The Role of Noise in Alliance Formation and Collusion in Conflicts," MPRA Paper 81533, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:81533
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    Cited by:

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    3. Justin Ehrlich & Matthew Harmon & Shane Sanders, 2020. "The alliance formation puzzle in contests with capacity-constraints: A test using American football reception-coverage contest data," PLOS ONE, Public Library of Science, vol. 15(3), pages 1-13, March.
    4. Shane Sanders, 2023. "Environmental Status Goods and Market-Based Conservation: An Arm of Ostrom’s Polycentric Approach?," Sustainability, MDPI, vol. 15(5), pages 1-9, February.

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    More about this item

    Keywords

    Contests; conflict; alliance paradox; collusion; noise;
    All these keywords.

    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • C73 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Stochastic and Dynamic Games; Evolutionary Games
    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • D74 - Microeconomics - - Analysis of Collective Decision-Making - - - Conflict; Conflict Resolution; Alliances; Revolutions

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