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Bargaining and War: A Review of Some Formal Models

Author

Listed:
  • Sandeep Baliga

    (Northwestern University)

  • Tomas Sjostrom

    (Rutgers University)

Abstract

Would perfectly rational agents always negotiate peaceful outcomes at the bargaining table, or would they sometimes fight costly wars? The Coase theorem suggests that when rational agents negotiate freely, they will reach a surplus-maximizing outcome. This seems to rule out war, since war will not in general be surplus-maximizing. However, the Coase theorem is valid only under certain assumptions, such as transferable utility (no restrictions on side-payments) and complete information. Brito and Intriligator (1985) showed how incomplete information may lead to war. An aggressor who demands concessions may simply be bluffing, so it may be rational to refuse his demands. If the aggressor is not bluffing, a war may ensue. We discuss how long such a war may last, and whether other kinds of ��frictions�� (such as limited commitment power and limits on side-payments) may also lead to war.

Suggested Citation

  • Sandeep Baliga & Tomas Sjostrom, 2013. "Bargaining and War: A Review of Some Formal Models," Korean Economic Review, Korean Economic Association, vol. 29, pages 235-266.
    • Handle: RePEc:kea:keappr:ker-20131231-29-2-01
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    References listed on IDEAS

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    Cited by:

    1. Abbink, Klaus & Dong, Lu & Huang, Lingbo, 2023. "Preventive wars," Games and Economic Behavior, Elsevier, vol. 142(C), pages 552-569.
      • Klaus Abbink & Lu Dong & Lingbo Huang, 2022. "Preventive Wars," Discussion Papers 2022-01, The Centre for Decision Research and Experimental Economics, School of Economics, University of Nottingham.
    2. Sambuddha Ghosh & Gabriele Gratton & Caixia Shen, 2019. "Intimidation: Linking Negotiation And Conflict," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 60(4), pages 1589-1618, November.
    3. Stephane Wolton, 2024. "Decentralised information transmission in the shadow of conflict," Journal of Theoretical Politics, , vol. 36(1), pages 64-82, January.
    4. Wolton, Stephane, 2018. "Signaling in the shadow of conflict," MPRA Paper 83922, University Library of Munich, Germany.
    5. Aniruddha Bagchi & João Ricardo Faria & Timothy Mathews, 2019. "A model of a multilateral proxy war with spillovers," Public Choice, Springer, vol. 179(3), pages 229-248, June.
    6. Parashari, Gopal Sharan & Kumar, Vimal, 2020. "Destruction and settlement norms as determinants of conflict: An evolutionary perspective," European Journal of Political Economy, Elsevier, vol. 63(C).

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    More about this item

    Keywords

    Bargaining; War;

    JEL classification:

    • F51 - International Economics - - International Relations, National Security, and International Political Economy - - - International Conflicts; Negotiations; Sanctions

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