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This article introduces a simple application of contest theory that neatly captures how Boulding's 'loss of strength gradient' determines the geographic extent of territory. We focus on the 'supply side' of territorial conflict, showing how the costs of initiating and escalating conflict over spatially dispersed resources shape the nature and scope of territory. We show that economies of scale in the production of violence and varying costs of projecting power at a distance combine to affect the intensive and extensive margins of conflict, and ultimately the geographic distribution of territory. Comparative statics analysis shows how the distribution of conflict and territory change as costs change, helping shed light on, for example, why new transportation technologies have historically led to a redrawing of territorial boundaries. We test and probe the boundaries of this model in two experiments varying the marginal costs of conflict over space and the fixed costs of entry. Increases in both costs interact to increase the probability of exclusive territories. The first experiment directly tests the theory in a static, one-shot setting that strictly matches the information conditions studied in the theory. The second experiment examines conflict behavior under conditions analogous to those in conflicts outside the lab: where no contestant knows the probability of winning, let alone the function determining that probability, and parties interact repeatedly. Median behavior closely tracks equilibrium predictions in all treatments.

This article introduces a simple application of contest theory that neatly captures how Boulding's 'loss of strength gradient' determines the geographic extent of territory. We focus on the 'supply side' of territorial conflict, showing how the costs of initiating and escalating conflict over spatially dispersed resources shape the nature and scope of territory. We show that economies of scale in the production of violence and varying costs of projecting power at a distance combine to affect the intensive and extensive margins of conflict, and ultimately the geographic distribution of territory. Comparative statics analysis shows how the distribution of conflict and territory change as costs change, helping shed light on, for example, why new transportation technologies have historically led to a redrawing of territorial boundaries. We test and probe the boundaries of this model in two experiments varying the marginal costs of conflict over space and the fixed costs of entry. Increases in both costs interact to increase the probability of exclusive territories. The first experiment directly tests the theory in a static, one-shot setting that strictly matches the information conditions studied in the theory. The second experiment examines conflict behavior under conditions analogous to those in conflicts outside the lab: where no contestant knows the probability of winning, let alone the function determining that probability, and parties interact repeatedly. Median behavior closely tracks equilibrium predictions in all treatments.

AbstractWe investigate in an economic experiment how people choose sides in disputes. In an eight-player side-taking game, two disputants at a time fight over an indivisible resource and other group members choose sides. The player with more supporters wins the resource, which is worth real money. Conflicts occur spontaneously between any two individuals in the group. Players choose sides by ranking their loyalties to everyone else in the group, and they automatically support the disputant they ranked higher. We manipulate participants' information about other players' loyalties and also their ability to communicate with public chat messages. We find that participants spontaneously and quickly formed alliances, and more information about loyalties caused more alliance-building. Without communication, we observe little evidence of bandwagon or egalitarian strategies, but with communication, some groups invented rank rotation schemes to equalize payoffs while choosing the same side to avoid fighting costs.

ObjectivesWith increasing attention being paid to inequality and poverty, this article attempts to shed light on mechanisms by which the poor arrive at decisions that are suboptimal and lead to "poverty traps."MethodsWe design a laboratory experiment in which we induce wealth and income differences between subjects to compare their behavior in a simple, two‐period life‐cycle savings and consumption task that controls subjects' homegrown risk preferences and isolates the impact of social comparison.ResultsWe find evidence that social comparison leads to suboptimal investment choices among the income‐poor.ConclusionsOne interpretation is that this is driven by a discouragement effect among those who are less likely to benefit from their investments—despite that fact that, by design, investment by all types leads to the same increase in expected utility.