Conflict as a Part of the Bargaining Process: Theory and Empirical Evidence
AbstractThis paper explores the role of conflict as a bargaining tool. It first presents a simple bargaining model with one-sided incomplete information. Parties can choose the scope of the confrontation they may want to engage in: A limited conflict that only introduces delay, or an absolute conflict that terminates the game. The outcomes of both types of confrontation are driven by the relative strength of the parties that is only known to one of them. Therefore, the non-final conflict conveys information about the eventual outcome of the absolute one. In this framework, it is shown that confrontation has a double-edged effect: It may paradoxically open the door to agreement when the uninformed party is so optimistic that no agreement is feasible. But it can also create inefficiency when agreement is possible but the informed agent has an incentive to improve her bargaining position by fighting. The second part of the paper performs a duration analysis on a sample of colonial and imperial wars fought between 1817 and 1988. The results offer evidence illustrating the use of conflict in negotiations.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by Edinburgh School of Economics, University of Edinburgh in its series ESE Discussion Papers with number 129.
Date of creation: Nov 2004
Date of revision:
Conflict; Bargaining; Incomplete information; Duration analysis.;
Find related papers by JEL classification:
- C41 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - Duration Analysis; Optimal Timing Strategies
- C78 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Bargaining Theory; Matching Theory
- D74 - Microeconomics - - Analysis of Collective Decision-Making - - - Conflict; Conflict Resolution; Alliances
- J52 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - Dispute Resolution: Strikes, Arbitration, and Mediation
- K41 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - Litigation Process
This paper has been announced in the following NEP Reports:
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- repec:fth:harver:1432 is not listed on IDEAS
- Anbarci, N. & Skaperdas, S. & Syropoulos, C., 2000.
"Comparing Bargaining Solutions in the Shadow of Conflict: How Norms Against Threats Can Have Real Effects,"
Papers, California Irvine - School of Social Sciences
00-01-19, California Irvine - School of Social Sciences.
- Anbarci, Nejat & Skaperdas, Stergios & Syropoulos, Constantinos, 2002. "Comparing Bargaining Solutions in the Shadow of Conflict: How Norms against Threats Can Have Real Effects," Journal of Economic Theory, Elsevier, vol. 106(1), pages 1-16, September.
- Horowitz, Andrew W, 1993. "Time Paths of Land Reform: A Theoretical Model of Reform Dynamics," American Economic Review, American Economic Association, vol. 83(4), pages 1003-10, September.
- Ausubel, Lawrence M. & Cramton, Peter & Deneckere, Raymond J., 2002.
"Bargaining with incomplete information,"
Handbook of Game Theory with Economic Applications, Elsevier,
in: R.J. Aumann & S. Hart (ed.), Handbook of Game Theory with Economic Applications, edition 1, volume 3, chapter 50, pages 1897-1945
- Fernandez, Raquel & Glazer, Jacob, 1991.
"Striking for a Bargain between Two Completely Informed Agents,"
American Economic Review,
American Economic Association, vol. 81(1), pages 240-52, March.
- Raquel Fernandez & Jacob Glazer, 1989. "Striking for a Bargain Between Two Completely Informed Agents," NBER Working Papers 3108, National Bureau of Economic Research, Inc.
- Joan Esteban & JÃ³zsef SÃ¡kovics, 2002.
"Endogenous bargaining power,"
Economics Working Papers
644, Department of Economics and Business, Universitat Pompeu Fabra.
- Nash, John, 1950. "The Bargaining Problem," Econometrica, Econometric Society, Econometric Society, vol. 18(2), pages 155-162, April.
- Cramton, Peter C & Tracy, Joseph S, 1992.
"Strikes and Holdouts in Wage Bargaining: Theory and Data,"
American Economic Review,
American Economic Association, vol. 82(1), pages 100-121, March.
- Peter Cramton & Joseph S. Tracy, 1992. "Strikes and Holdouts in Wage Bargaining: Theory and Data," Papers of Peter Cramton 92aer, University of Maryland, Department of Economics - Peter Cramton, revised 09 Jun 1998.
- Mnookin, Robert & Wilson, Robert, 1998. "A Model of Efficient Discovery," Games and Economic Behavior, Elsevier, vol. 25(2), pages 219-250, November.
- Schnell, John F & Gramm, Cynthia L, 1987. "Learning by Striking: Estimates of the Teetotaler Effect," Journal of Labor Economics, University of Chicago Press, University of Chicago Press, vol. 5(2), pages 221-41, April.
- Helmut Bester & Karl Warneryd, .
"Conflict Resolution under Asymmetric Information,"
Papers, Departmental Working Papers
006, Departmental Working Papers.
- Kiefer, Nicholas M, 1988. "Economic Duration Data and Hazard Functions," Journal of Economic Literature, American Economic Association, vol. 26(2), pages 646-79, June.
- Kennan, John & Wilson, Robert, 1989. "Strategic Bargaining Models and Interpretation of Strike Data," Journal of Applied Econometrics, John Wiley & Sons, Ltd., John Wiley & Sons, Ltd., vol. 4(S), pages S87-130, Supplemen.
- Stergios Skaperdas, 2008.
"An economic approach to analyzing civil wars,"
Economics of Governance, Springer,
Springer, vol. 9(1), pages 25-44, January.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Gina Reddie).
If references are entirely missing, you can add them using this form.