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A dynamic theory of war and peace

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  • Yared, Pierre
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    Abstract

    In every period, an aggressive country seeks concessions from a non-aggressive country with private information about their cost. The aggressive country can force concessions via war, and both countries suffer from limited commitment. We characterize the efficient sequential equilibria. We show that war is necessary to sustain peace and that temporary wars can emerge because of the coarseness of public information. In the long run, temporary wars can be sustained only if countries are patient, if the cost of war is large, and if the cost of concessions is low.

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    Bibliographic Info

    Article provided by Elsevier in its journal Journal of Economic Theory.

    Volume (Year): 145 (2010)
    Issue (Month): 5 (September)
    Pages: 1921-1950

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    Handle: RePEc:eee:jetheo:v:145:y:2010:i:5:p:1921-1950

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    Web page: http://www.elsevier.com/locate/inca/622869

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    Keywords: Asymmetric and private information Contract theory International political economy War;

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    Cited by:
    1. Spolaore, Enrico & Wacziarg, Romain, 2013. "War and Relatedness," CAGE Online Working Paper Series 140, Competitive Advantage in the Global Economy (CAGE).
    2. repec:pdn:wpaper:78 is not listed on IDEAS
    3. Daron Acemoglu & Alexander Wolitzky, 2012. "Cycles of Distrust: An Economic Model," NBER Working Papers 18257, National Bureau of Economic Research, Inc.
    4. Petros G. Sekeris, 2012. "The Tragedy of the Commons in a Violent World," Working Papers 1213, University of Namur, Department of Economics.
    5. Dominic Rohner & Mathias Thoenig & Fabrizio Zilibotti, 2011. "War Signals: A Theory of Trade, Trust and Conflict," OxCarre Working Papers 058, Oxford Centre for the Analysis of Resource Rich Economies, University of Oxford.
    6. repec:cge:warwcg:139 is not listed on IDEAS
    7. Ariel Zetlin-Jones, . "Efficient Financial Crises," GSIA Working Papers 2014-E19, Carnegie Mellon University, Tepper School of Business.
    8. Roman, Mihai Daniel, 2010. "A game theoretic approach of war with financial influences," MPRA Paper 38389, University Library of Munich, Germany.
    9. Alessandro Dovis, 2013. "Efficient Sovereign Default," 2013 Meeting Papers 293, Society for Economic Dynamics.
    10. Bilkic, Natasa & Gries, Thomas, 2012. "When to Attack an Oppressive Government?," Annual Conference 2012 (Goettingen): New Approaches and Challenges for the Labor Market of the 21st Century 62031, Verein für Socialpolitik / German Economic Association.

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