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.

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