We study endogenous group formation in tournaments employing experimental three-player contests. We …nd that players in endogenously formed alliances cope better with the moral hazard problem in groups than players who are forced into an alliance. Also, players who are committed to expending e¤ort above average choose to stand alone. If these players are forced to play in an alliance, they invest even more, whereas their co-players choose lower e¤ort. Anticipation of this exploitation may explain their preference to stand alone.JEL codes: D72, D74

We study endogenous group formation in tournaments employing experimental three-player contests. We …nd that players in endogenously formed alliances cope better with the moral hazard problem in groups than players who are forced into an alliance. Also, players who are committed to expending e¤ort above average choose to stand alone. If these players are forced to play in an alliance, they invest even more, whereas their co-players choose lower e¤ort. Anticipation of this exploitation may explain their preference to stand alone.JEL codes: D72, D74

Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Terms of use: Documents in EconStor may www.econstor.euBalance of power and the propensity of con ‡ict February 27, 2015 AbstractWe study the role of an imbalance in …ghting strengths when players bargain in the shadow of con ‡ict. Our experimental results suggest: In a simple bargaining game with an exogenous mediation proposal, the likelihood of con ‡ict is independent of the balance of power. If bargaining involves endogenous demand choices, however, the likelihood of con ‡ict is higher if power is more imbalanced. Even though endogenous bargaining outcomes re ‡ect the players' unequal …ghting strengths, strategic uncertainty causes outcomes to be most e¢ cient when power is balanced. In turn, the importance of exogenous mediation proposals depends on the balance of power.JEL codes: C78, C91, D72, D74

Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. Terms of use: Documents in EconStor may www.econstor.euBalance of power and the propensity of con ‡ict February 27, 2015 AbstractWe study the role of an imbalance in …ghting strengths when players bargain in the shadow of con ‡ict. Our experimental results suggest: In a simple bargaining game with an exogenous mediation proposal, the likelihood of con ‡ict is independent of the balance of power. If bargaining involves endogenous demand choices, however, the likelihood of con ‡ict is higher if power is more imbalanced. Even though endogenous bargaining outcomes re ‡ect the players' unequal …ghting strengths, strategic uncertainty causes outcomes to be most e¢ cient when power is balanced. In turn, the importance of exogenous mediation proposals depends on the balance of power.JEL codes: C78, C91, D72, D74

In contest experiments, overbidding is a widely observed phenomenon. One common explanation for overbidding is that winning in itself yields utility, termed the joy of winning. However, the joy of winning is di¢ cult to observe and to quantify. This paper develops a novel, incentivized way to measure the individual-speci…c joy of winning as well as the frustration of losing in a Tullock lottery contest. We …nd that the willingness to pay for a restart of the contest di¤ers between winners and losers. Compared to a theoretical benchmark, winners are more satis…ed and overbid for restart of the contest, while losers are less satis…ed and underbid. Further, e¤ort levels are higher in the second contest, which can be explained by selection of high e¤ort types with a high joy of winning into the restarted contest.