Intergroup conict and intra-group punishment in an experimental contest game

In many areas of social life, different parties interact under conditions of rivalry, striving for something that not all can obtain. Examples of such rivalries in the economic and politi-cal realms are R&D competition, promotion tournaments in internal labor markets, lobbying for government favors, and electoral competition between political parties. As a result of such rivalries, considerable resources are spent on activities that have no direct productive value. For example, Thomas W. Hazlett and Robert J. Michaels (1993) estimated that, previous to the adop-tion of auctions by the Federal Communications Commission (FCC), the real resources spent on!ling applications for cell phone license lotteries (with an estimated market value of $1 billion at that time) was about $400 million. Extreme instances of rivalry are military con"icts and socio-political con"icts, like those that arise between parts of a country, when one of them is!ghting for a different political status or independence, and those between ethnic groups. Actual con"icts of this type are often very costly, both in human lives and in material losses. Much of the economic analysis of con"ict has been based on contest or rent-seeking models. Michelle R. Gar!nkel and Stergios Skaperdas (2007) present an overview of the economics of con"ict, and Kai A. Konrad (2007) provides a recent survey of the theoretical literature on contest models. In a contest, several rival parties expend resources in trying to secure a prize or rent for themselves. In models of sociopolitical con"ict, winning the prize represents the imple-mentation of the political solution more favorable to the winning party. A contest success func-tion based on the set of the players ’ (nonrefundable) investments determines which contestant receives the prize. One of the most used contest models is the lottery game by Gordon Tullock (1967, 1980), in which each contesting party has a probability of winning the prize equal to th