Reciprocity in the shadow of threat
AbstractThis paper considers a partial equilibrium model of conflict where two asymmetric, rational and risk-neutral opponents evaluate differently a contested stake. Differently from common contest models, agents have the option of choosing a second instrument to affect the outcome of the conflict. The second instrument is assumed to capture positive investments in âconflict managementâ - labelled as âtalksâ. It will be demonstrated that the asymmetry in the evaluation of the stake does constitute a powerful force influencing agentsâ behaviour. In particular, (a) whenever the asymmetry in the evaluation of the stake is extremely large there is no room for cooperation and a conflict trap emerges; (b) whenever the degree of asymmetry falls within a critical interval cooperation seems to emerge even if only the agent with the higher evaluation of the stake makes a concession, proportional to the optimal choice of âtalksâ; (c) as the evaluations of the stake converge only reciprocal concessions (capturing a kind of strong reciprocity) made by both agents can pave the way for cooperation. In such a case, the existence of reciprocal concessions paves the way for establishing a potential settlement region (PSR) given that both parties can be better off while expending resources in âtalksâ. Finally, throughout the paper, the concept of entropy is applied as a tool for the measurement and evaluation of conflict and conflict management.
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Bibliographic InfoArticle provided by Springer in its journal International Review of Economics.
Volume (Year): 55 (2008)
Issue (Month): 1 (April)
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Web page: http://www.springer.com/economics/journal/12232
Other versions of this item:
- D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
- D74 - Microeconomics - - Analysis of Collective Decision-Making - - - Conflict; Conflict Resolution; Alliances
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