Sequential formation of alliances in survival contests

• Date: 01 March 2020
• Author: Chen‐Yu Pan,Hideo Konishi
• DOI: http://doi.org/10.1111/ijet.12246
• Published date: 01 March 2020

Int J Econ Theory. 2020;16:95–105. wileyonlinelibrary.com/journal/ijet © 2019 IAET

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95

Received: 1 February 2019

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Accepted: 18 August 2019

DOI: 10.1111/ijet.12246

ORIGINAL ARTICLE

Sequential formation of alliances in survival

contests

Hideo Konishi

1

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Chen‐Yu Pan

2

1

Department of Economics, Boston

College, Chestnut Hill, Massachusetts

2

Department of Public Finance and

Taxation, School of Economics and

Management, Wuhan University,

Wuhan, China

Correspondence

Hideo Konishi, Department of

Economics, Boston College,

Chestnut Hill, MA 02467.

Email: hideo.konishi@bc.edu

Abstract

We consider a sequential formation of alliances à la

Bloch (1996) and Okada (1996), followed by a two‐stage

contest in which alliances first compete with each other,

and then the members in the winning alliance compete

again for an indivisible prize. In contrast to Konishi and

Pan (2019a), which adopted an open‐membership game

as the alliance formation process, alliances are allowed

to limit their memberships (excludable alliances). We

show that if members’efforts are strongly complemen-

tary to each other, there will be exactly two asymmetric

alliances: the larger alliance is formed first and then the

remaining players form the smaller one. This result

contrasts with the one under open membership, where

moderate complementarity is necessary to support a

two‐alliance structure. It is also in stark contrast with

Bloch, Sánchez‐Pagés, and Soubeyran (2006), which

shows that a grand coalition is formed in the same game

if the prize is divisible and a binding contract can be

used to avoid further conflicts after an alliance wins the

prize.

KEYWORDS

coalition formation, contest, indivisible award, rent‐seeking

JEL CLASSIFICATION

D71; D74