Public Choice https://doi.org/10.1007/s11127-018-0564-y The role of noise in alliance formation and collusion in conflicts 1 2 3 James W. Boudreau · Shane Sanders · Nicholas Shunda Received: 25 September 2017 / Accepted: 23 May 2018 © Springer Science+Business Media, LLC, part of Springer Nature 2018 Abstract Many real-world conflicts are to some extent determined randomly by noise, and many also depend critically on the formation of alliances or long-run cooperative rela- tionships. In this paper, we emphasize that the specific manner by which noise is modeled in contest success functions (CSFs) has implications for both the possibility of forming cooperative relationships and the features of such relationships. The key issue is that there are two distinct approaches to modeling noise in CSFs, each with their own merits and each leading to different results depending on which type of alliance formation is under consideration. 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; that is not the case for models with an additive noise parameter. In an infinitely repeated conflict setting, we again find discrepant results: with additive noise, sustaining collusion via Nash reversion
Public Choice – Springer Journals
Published: Jun 1, 2018
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