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Conflict and the Social Contract

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  • Helmut Bester
  • Karl Wärneryd

Abstract

We consider social contracts for resolving conflicts between two agents who are uncertain about each other's fighting potential. Applications include international conflict, litigation and elections. Even though only a peaceful agreement avoids a loss of resources, if this loss is small enough, then any contract must assign a positive probability of conflict. We show how the likelihood of conflict outbreak depends on the distribution of power between the agents and their information about each other.

Suggested Citation

  • Helmut Bester & Karl Wärneryd, 2006. "Conflict and the Social Contract," Scandinavian Journal of Economics, Wiley Blackwell, vol. 108(2), pages 231-249, July.
    • Handle: RePEc:bla:scandj:v:108:y:2006:i:2:p:231-249
    DOI: 10.1111/j.1467-9442.2006.00452.x
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    Cited by:

    1. Stergios Skaperdas, 2008. "An economic approach to analyzing civil wars," Economics of Governance, Springer, vol. 9(1), pages 25-44, January.
    2. Long, Iain W., 2015. "Better feared than loved: Reputations and the motives for conflict," Journal of Economic Behavior & Organization, Elsevier, vol. 114(C), pages 46-61.
    3. Santiago Sanchez-Pages, 2009. "Bargaining and Conflict with Incomplete Information," Edinburgh School of Economics Discussion Paper Series 191, Edinburgh School of Economics, University of Edinburgh.
    4. Stergios Skaperdas, 2006. "Bargaining Versus Fighting," Defence and Peace Economics, Taylor & Francis Journals, vol. 17(6), pages 657-676.
    5. Mark Fey & Kristopher Ramsay, 2009. "Mechanism design goes to war: peaceful outcomes with interdependent and correlated types," Review of Economic Design, Springer;Society for Economic Design, vol. 13(3), pages 233-250, September.
    6. Johannes Hörner & Massimo Morelli & Francesco Squintani, 2015. "Mediation and Peace," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 82(4), pages 1483-1501.
    7. Raphaela Hennigs, 2019. "Conflict Prevention by Bayesian Persuasion," Working Papers tax-mpg-rps-2019-16_1, Max Planck Institute for Tax Law and Public Finance.
    8. Clara Ponsati & Santiago Sanchez-Pages, 2012. "Optimism and commitment: an elementary theory of bargaining and war," SERIEs: Journal of the Spanish Economic Association, Springer;Spanish Economic Association, vol. 3(1), pages 157-179, March.
    9. Thomas Tangerås, 2009. "Democracy, autocracy and the likelihood of international conflict," Economics of Governance, Springer, vol. 10(2), pages 99-117, April.
    10. Long, Iain W, 2019. "Contests and Negotiation Between Hubristic Players," Cardiff Economics Working Papers E2019/17, Cardiff University, Cardiff Business School, Economics Section.
    11. Adam Meirowitz & Massimo Morelli & Kristopher W. Ramsay & Francesco Squintani, 2019. "Dispute Resolution Institutions and Strategic Militarization," Journal of Political Economy, University of Chicago Press, vol. 127(1), pages 378-418.
    12. Garfinkel, Michelle R. & Skaperdas, Stergios, 2007. "Economics of Conflict: An Overview," Handbook of Defense Economics, in: Keith Hartley & Todd Sandler (ed.), Handbook of Defense Economics, edition 1, volume 2, chapter 22, pages 649-709, Elsevier.
    13. McBride, Michael & Skaperdas, Stergios, 2014. "Conflict, settlement, and the shadow of the future," Journal of Economic Behavior & Organization, Elsevier, vol. 105(C), pages 75-89.
    14. Vimal Kumar & Stergios Skaperdas, 2008. "On The Economics oF Organized Crime," Working Papers 070815, University of California-Irvine, Department of Economics.
    15. Santiago Sánchez-Pagés, 2009. "Conflict as a Part of the Bargaining Process," Economic Journal, Royal Economic Society, vol. 119(539), pages 1189-1207, July.
    16. Tridimas, George, 2011. "The political economy of power-sharing," European Journal of Political Economy, Elsevier, vol. 27(2), pages 328-342, June.
    17. Kim, Jin Yeub, 2017. "Interim third-party selection in bargaining," Games and Economic Behavior, Elsevier, vol. 102(C), pages 645-665.
    18. Zheng, Charles Z., 2019. "Necessary and sufficient conditions for peace: Implementability versus security," Journal of Economic Theory, Elsevier, vol. 180(C), pages 135-166.
    19. Roland Hodler & Paul Schaudt & Alberto Vesperoni, 2023. "Mining for Peace," CESifo Working Paper Series 10207, CESifo.
    20. Jingfeng Lu & Zongwei Lu & Christian Riis, 2021. "Peace through bribing," Papers 2107.11575, arXiv.org, revised Apr 2023.
    21. Libman, Alexander Mikhailovich, 2009. "Эндогенные Границы И Распределение Власти В Федерациях И Международных Сообществах [ENDOGENOUS BOUNDARIES AND DISTRIBUTION OF POWER In the Federation]," MPRA Paper 16473, University Library of Munich, Germany.
    22. Benjamin Balzer & Johannes Schneider, 2021. "Managing a conflict: optimal alternative dispute resolution," RAND Journal of Economics, RAND Corporation, vol. 52(2), pages 415-445, June.
    23. Alberto Vesperoni & Anıl Yıldızparlak, 2019. "Inequality and conflict outbreak," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 53(1), pages 135-173, June.
    24. Jin Yeub Kim, 2022. "Neutral public good mechanisms," PLOS ONE, Public Library of Science, vol. 17(4), pages 1-16, April.
    25. Nathan Fiala & Stergios Skaperdas, 2011. "Economic Perspectives on Civil Wars," Chapters, in: Christopher J. Coyne & Rachel L. Mathers (ed.), The Handbook on the Political Economy of War, chapter 10, Edward Elgar Publishing.

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    More about this item

    JEL classification:

    • C78 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Bargaining Theory; Matching Theory
    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • D74 - Microeconomics - - Analysis of Collective Decision-Making - - - Conflict; Conflict Resolution; Alliances; Revolutions
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation
    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies

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