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Long Wars

Author

Listed:
  • Sandeep Baliga
  • Tomas Sjöström

Abstract

We study whether the Coase conjecture holds for bargaining during war. Two players, A and B, contest a divisible resource until one side collapses or agreement is reached. If player B is militarily strong, then he insists on getting a large share. However, player A only concedes this large share if player B credibly signals his strength by fighting a sufficiently long war. Thus, the Coase conjecture fails, and asymmetric information about military strength explains why long wars may be inevitable. Using a mechanism design approach, we derive a lower bound on the expected duration of war.

Suggested Citation

  • Sandeep Baliga & Tomas Sjöström, 2026. "Long Wars," American Economic Review: Insights, American Economic Association, vol. 8(2), pages 145-159, June.
    • Handle: RePEc:aea:aerins:v:8:y:2026:i:2:p:145-59
    DOI: 10.1257/aeri.20240624
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    More about this item

    JEL classification:

    • 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; Revolutions
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • F51 - International Economics - - International Relations, National Security, and International Political Economy - - - International Conflicts; Negotiations; Sanctions

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