Contests Between Unequal Opponents: Three Explorations My doctoral dissertation enquires into the nature and consequences of (bilateral) conflicts between a priori unequal opponents (with each opponent being either an individual or a well-knit community of individuals) in diverse contexts. Is the ex ante inequality exacerbated (in some specific senses) by the conflict, or is it alleviated? Which opponent, if any, gains from the conflict? Will the use of supporters by the opponents help or hurt their outcomes? What are the broader social consequences of such conflicts, and how do they depend upon the initial asymmetry?
My Job Market Paper: Appropriative Conflicts and the Evolution of Property Rights (with Arijit Sen) Weak property rights over ‘own fruits of labor’ can provoke appropriative conflicts. However, the recognition of consequent resource-misallocation and value-destruction can encourage collective action towards improving property rights enforcement. We model two (pre-modern) communities populated by a sequence of myopic generations, initially located in a weak property-rights regime with unequal resources. In every generation, the communities (which are the decision-making units) costlessly adjust inherited (common) property rights by mutual consent, and then allocate inherited resources (whose amounts depend on past production and consumption) towards value creation and capture. We study the co-evolution of the property rights regime and resource inequality over the infinite time horizon, and answer the following questions:
Which property rights regime would a community prefer to establish in a period? In any generation / period in which the two communities are not too resource-asymmetric, they will share the (endogenous) preference for the establishment of perfect property rights: in the absence of any institutional inertia, they will be able to attain this mutually preferred outcome in the very same period. Thus, the ability to modify inherited property rights allows the two communities to escape (short-term) Prisoners' Dilemma-like scenarios. However, in any generation in which the two communities are sufficiently resource-asymmetric, the resource-poorer community's preference over property rights completely diverges from that of the resource-richer community – the poorer community would prefer to have the worst possible property rights regime, i.e., a state of anarchy, established.
Which property rights regime gets established in the long-run? When initial resource-inequality is significant and/or the level of past productive investment (rather than the level of past consumption) is the dominant driver of a community’s resource-growth, the poorer community eventually drags the richer community into perpetual anarchy. When initial resource-inequality is not significant, then high institutional inertia is necessary for the establishment of anarchy in the long-run.
What are the welfare consequences for the two communities in the short-run and in the long-run? When the communities are on an equilibrium path of devolution to anarchy, a policy intervention that exogenously and permanently imposes perfect property rights on them can lead to higher aggregate resource growth and higher welfare in each community in the long-run, but can also cause an initial set of generations in the poorer community to be worse off compared to the laissez faire equilibrium path.
Bower-birds’ Mate-selection Contests: Analysis and an Application With the aim of wooing female birds, male satin bower-birds spend considerable time and effort in creating and decorating their bowers, and then attempt to destroy / sabotage the bowers of rival males; female bower-birds, in turn, select their mates on the basis of the relative attractiveness of the surviving bowers (presumably because the final bower quality is an indicator of the inherent strength / genetic quality of the bower's creator, which is what the female bird is likely to care about). A game-theoretic model of this mating contest– which is essentially a model of competitive signaling followed by signal sabotage–with a single female bird and two male birds is studied in this paper (with the female bird's mate-selection rule simply being taken as: select the creator of the bower with the highest final quality to be her mate). It is shown that the possibility of bower-sabotage can improve both male birds' payoffs while reducing the female bird's payoff. The former happens because the anticipated threat of sabotage depresses each male bird’s incentive to engage in bower-building, and the latter happens because sabotage introduces noise in the female bird’s selection process. We then study a principal-agent model (similar in structure to the bower-bird contest) in which the principal cares about the best among the outputs produced by two agents, and is in a position to design a tournament among the agents with suitably chosen order-of-moves and prizes. In a setting where (a) produced outputs need to be stress-tested to determine their durability (where stress-testing is similar to mutual sabotage in its analytics, though not in intent), and (b) outputs can only be evaluated in relation to other outputs or an exogenous benchmark, we show that if the two agents are not too asymmetric then a tournament is strictly better for the principal than individually contracting with a single agent. If no external benchmark is available, then for limited agent-asymmetry, the optimal output-selection mechanism is a simultaneous tournament with the maximal feasible winning prize.
Contests with Foot-Soldiers (with Arijit Sen) This paper models the interaction between two asymmetric contestants (politicians) – an ex anteunderdog and an ex antefavourite – who attempt to engage atomistic foot-soldiers (unemployed youth) to fight for them in their aim to win a contest (political election). In many settings, each of the contestants is likely to gain access to significant economic resources and power if and only if she wins the contest. As a result, a significant part of a contestant’s foot-soldier compensation is contingent upon the contestant winning the contest – in private goods like cash, or in excludable public goods like power and access. Further, the foot-soldiers are likely to be (at least partially) mercenary in that higher compensation offers will induce them to switch allegiance away from a ‘like-minded’ contestant. The equilibria of such contests are shown to possess the following key properties in a large set of circumstances (e.g., for contingent and non-contingent compensations in private or public goods): Contestants’ offers of contingent compensation force potential foot-soldiers to choose their allegiance on the basis of predicted winners – and that act, in and of itself, enables the ex ante favourite contestant to extend her initial lead over the ex anteunderdog.