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Mediation and Peace

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  • Johannes Horner
  • Massimo Morelli
  • Francesco Squintani

Abstract

This paper brings mechanism design to the study of conflict resolution in international relations. We determine when and how unmediated communication and mediation reduce the ex ante probability of conflict, in a simple game where conflict is due to asymmetric information. Unmediated communication helps reducing the chance of conflict as it allows conflicting parties to reveal their types and establish type-dependent transfers to avoid conflict. Mediation improves upon unmediated communication when the intensity of conflict is high, or when asymmetric information is large. The mediator improves upon unmediated communication by not precisely reporting information to conflicting parties, and precisely, by not revealing to a player with probability one that the opponent is weak. Surprisingly, in our set up, arbitrators who can enforce settlements are no more effective in reducing the probability of conflict than mediators who can only make non-binding recommendations.

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Bibliographic Info

Paper provided by European University Institute in its series Economics Working Papers with number ECO2010/32.

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Date of creation: 2010
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Handle: RePEc:eui:euiwps:eco2010/32

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Keywords: Mediation; War and Peace; Imperfect Information; Communication Games; Optimal Mechanism;

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References

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  1. Fearon, James D., 1995. "Rationalist explanations for war," International Organization, Cambridge University Press, Cambridge University Press, vol. 49(03), pages 379-414, June.
  2. Schwarz, Michael & Sonin, Konstantin, 2005. "A Theory of Brinkmanship, Conflicts, and Commitments," CEPR Discussion Papers 5075, C.E.P.R. Discussion Papers.
  3. AUMANN, Robert J., . "Subjectivity and correlation in randomized strategies," CORE Discussion Papers RP -167, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  4. Powell, Robert, 2006. "War as a Commitment Problem," International Organization, Cambridge University Press, Cambridge University Press, vol. 60(01), pages 169-203, January.
  5. Myerson, Roger B, 1979. "Incentive Compatibility and the Bargaining Problem," Econometrica, Econometric Society, Econometric Society, vol. 47(1), pages 61-73, January.
  6. Myerson, Roger B., 1982. "Optimal coordination mechanisms in generalized principal-agent problems," Journal of Mathematical Economics, Elsevier, vol. 10(1), pages 67-81, June.
  7. Green, Jerry R & Laffont, Jean-Jacques, 1987. "Posterior Implementability in a Two-Person Decision Problem," Econometrica, Econometric Society, Econometric Society, vol. 55(1), pages 69-94, January.
  8. Cramton Peter C. & Palfrey Thomas R., 1995. "Ratifiable Mechanisms: Learning from Disagreement," Games and Economic Behavior, Elsevier, vol. 10(2), pages 255-283, August.
  9. Banks, Jeffrey S. & Calvert, Randall L., 1992. "A battle-of-the-sexes game with incomplete information," Games and Economic Behavior, Elsevier, vol. 4(3), pages 347-372, July.
  10. Tomz, Michael, 2007. "Domestic Audience Costs in International Relations: An Experimental Approach," International Organization, Cambridge University Press, Cambridge University Press, vol. 61(04), pages 821-840, October.
  11. Kennan, J. & Wilson, R., 1991. "Bargaining with Private Information," Working Papers, University of Iowa, Department of Economics 90-01rev, University of Iowa, Department of Economics.
  12. Myerson, Roger B. & Satterthwaite, Mark A., 1983. "Efficient mechanisms for bilateral trading," Journal of Economic Theory, Elsevier, vol. 29(2), pages 265-281, April.
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Cited by:
  1. Maria Goltsman & Gregory Pavlov, 2012. "Communication in Cournot Oligopoly," UWO Department of Economics Working Papers, University of Western Ontario, Department of Economics 20121, University of Western Ontario, Department of Economics.
  2. Corchón, Luis C. & Yıldızparlak, Anıl, 2013. "Give peace a chance: The effect of ownership and asymmetric information on peace," Journal of Economic Behavior & Organization, Elsevier, vol. 92(C), pages 116-126.

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