Competing for Loyalty: The Dynamics of Rallying Support


Iaryczower, Matias, and Santiago Oliveros. “Competing for Loyalty: The Dynamics of Rallying Support.” The American Economic Review 107, no. 10 (2017): 2990-3005.
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We consider a class of dynamic collective action problems in which either a single principal or two competing principals vie for the support of members of a group. We focus on the dynamic problem that emerges when agents' decisions to support an alternative are irreversible, and agents negotiate and commit their support to the principal sequentially. A danger for the agents in this context is that a principal may be able to poach agents to her side by exploiting competition among members of the group. Would agents benet from introducing competition between opposing principals? We show that when the principals' policies provide value to the agents, competition generally reduces agents' welfare. We study applications to endorsements in elections and corporate takeovers.

Last updated on 11/07/2017