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Conflict and Conflict Managment with Asymmetric Stakes (The Bad-Cop and the Good Cop part II)

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  • Caruso, Raul

Abstract

This paper considers a partial equilibrium model of conflict where two asymmetric, rational and risk-neutral opponents evaluate differently the 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 ‘conflict management’ - labelled as ‘talks’. It will be demonstrated that, under some conditions, an asymmetry in the evaluation of the stake can lead to a concession from one agent to the other. In particular, the agent with the higher evaluation of the stake would make a concession, proportional to the optimal choice of ‘talks’ . The existence of a concession paves the way for establishing a feasible settlement region (FSR) given that both parties can be better off while expending resources in ‘talks’. Eventually the basic model is extended in order to consider the existence of asymmetries in technological capabilities. Whenever the agents exhibit sufficiently asymmetric productive characteristics a FSR can be established even if a concession is not ensured. However a concession can enlarge the FSR. Finally, throughout the paper, the concept of entropy is applied as a tool for the measurement and evaluation of conflict and

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Bibliographic Info

Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 1438.

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Date of creation: Jan 2007
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Handle: RePEc:pra:mprapa:1438

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Related research

Keywords: Conflict; Contest; Conflict management; Asymmetry in evaluation; Entropy; Returns to Scale; Concession; Guns; Talks;

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References

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  1. Anderton, Charles H & Anderton, Roxane A & Carter, John R, 1999. "Economic Activity in the Shadow of Conflict," Economic Inquiry, Western Economic Association International, vol. 37(1), pages 166-79, January.
  2. Gil S. Epstein & Carsten Hefeker, 2003. "Lobbying contests with alternative instruments," Economics of Governance, Springer, vol. 4(1), pages 81-89, 04.
  3. Genicot, C. & Skaperdas, S., 2000. "Investing in Confict Management," Papers 00-01-17, California Irvine - School of Social Sciences.
  4. Halvor Mehlum & Karl Moene, 2002. "Battlefields and marketplaces," Defence and Peace Economics, Taylor & Francis Journals, vol. 13(6), pages 485-496.
  5. Enrico Spolaore & Alberto Alesina, 2001. "War, Peace and the Size of Countries," Harvard Institute of Economic Research Working Papers 1937, Harvard - Institute of Economic Research.
  6. J. Amegashie, 2006. "A contest success function with a tractable noise parameter," Public Choice, Springer, vol. 126(1), pages 135-144, January.
  7. Nuno Garoupa & Joao E. Gata, 2000. "A theory of international conflict management and sanctioning," Economics Working Papers 481, Department of Economics and Business, Universitat Pompeu Fabra.
  8. Michelle R. Garfinkel & Stergios Skaperdas, 2006. "Economics of Conflict: An Overview," Working Papers 050623, University of California-Irvine, Department of Economics, revised Sep 2006.
  9. Maria Arbatskaya & Hugo Mialon, 2005. "Two-activity Contests," Emory Economics 0527, Department of Economics, Emory University (Atlanta).
  10. Konrad, Kai A. & Skaperdas, Stergios, 1997. "Credible threats in extortion," Journal of Economic Behavior & Organization, Elsevier, vol. 33(1), pages 23-39, May.
  11. Raul Caruso, 2005. "Asimmetrie negli incentivi, equilibrio competititvo e impegno agonistico: distorsioni in presenza di doping e combine," Rivista di Diritto ed Economia dello Sport, Centro di diritto e business dello Sport, vol. 1(3), pages 13-38, Dicembre.
  12. Raul Caruso, 2004. "A Trade Institution as a Peaceful Institution?," Others 0406003, EconWPA, revised 15 Dec 2004.
  13. Christian Riis & Derek J. Clark, 1997. "Contest success functions: an extension," Economic Theory, Springer, vol. 11(1), pages 201-204.
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Citations

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Cited by:
  1. Raul Caruso, 2008. "Reciprocity in the shadow of threat," International Review of Economics, Springer, vol. 55(1), pages 91-111, April.
  2. Caruso, Raul, 2007. "Continuing Conflict and Stalemate: A Note," MPRA Paper 2316, University Library of Munich, Germany.
  3. Raul Caruso, 2009. "The Basic Economics of Match Fixing in Sport Tournaments," Economic Analysis and Policy (EAP), Queensland University of Technology (QUT), School of Economics and Finance, vol. 39(3), pages 355-377, December.
  4. Caruso, Raul, 2007. "THE Economics of Match-Fixing," MPRA Paper 3085, University Library of Munich, Germany.

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