A Theory of Brinkmanship, Conflicts, and Commitments
Many conflicts and negotiations can be viewed as dynamic games in which parties have no commitment power. In our model, a potential aggressor demands concessions from a weaker party by threatening war. The absence of commitment makes a continuous stream of transfers a more effective appeasement strategy than a lump-sum transfer. As long as both sides have constant marginal utility of consumption, it is possible to construct a self-enforcing peace agreement even if transfers shift the balance of power. When marginal utility of consumption is decreasing, a self-enforcing peace agreement may not be feasible. The bargaining power of the potential aggressor increases dramatically if she is able to make probabilistic threats, for example, by taking an observable action that leads to war with a positive probability. This "brinkmanship strategy" allows a blackmailer to extract a positive stream of payments from the victim, even if carrying out the threat is harmful to both parties. Our results are applicable to environments ranging from diplomacy to negotiations within or among firms and are aimed to bring together "parallel" investigations in the nature of commitment in economics and political science. The Author 2007. Published by Oxford University Press on behalf of Yale University. All rights reserved. For Permissions, please email: email@example.com, Oxford University Press.
If 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.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
Volume (Year): 24 (2008)
Issue (Month): 1 (May)
|Contact details of provider:|| Postal: Oxford University Press, Great Clarendon Street, Oxford OX2 6DP, UK|
Fax: 01865 267 985
Web page: http://jleo.oupjournals.org/
|Order Information:||Web: http://www.oup.co.uk/journals|
References listed on IDEAS
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.:
- Sandeep Baliga & Tomas Sjostrom, 2001.
"Arms Races and Negotiations,"
NajEcon Working Paper Reviews
- Sandeep Baliga & Tomas Sjostrom, 2001. "Arms Races and Negotiations," Levine's Working Paper Archive 391749000000000005, David K. Levine.
- Sandeep Baliga & Tomas Sjostrom, 2003. "Arms Races and Negotiations," Levine's Working Paper Archive 618897000000000766, David K. Levine.
- Sandeep Baliga & Tomas Sjostrom, 2001. "Arms Races and Negotiations," Economics Working Papers 0007, Institute for Advanced Study, School of Social Science.
- Balinga, Sandeep & Sjostrom, Tomas, 2001. "Arms Races and Negotiations," Working Papers 3-01-2, Pennsylvania State University, Department of Economics.
- Fearon, James D., 1995. "Rationalist explanations for war," International Organization, Cambridge University Press, vol. 49(03), pages 379-414, June.
- L. Wade, 1988. "Review," Public Choice, Springer, vol. 58(1), pages 99-100, July.
- Jack Hirshleifer, 2001.
"Appeasement: Can It Work?,"
American Economic Review,
American Economic Association, vol. 91(2), pages 342-346, May.
- Avinash Dixit & Gene M. Grossman & Faruk Gul, 2000. "The Dynamics of Political Compromise," Journal of Political Economy, University of Chicago Press, vol. 108(3), pages 531-568, June.
- Steven Shavell & Kathryn Spier, 1996.
"Threats without Binding Commitment,"
NBER Working Papers
5461, National Bureau of Economic Research, Inc.
- Gary S. Becker, 1983. "A Theory of Competition Among Pressure Groups for Political Influence," The Quarterly Journal of Economics, Oxford University Press, vol. 98(3), pages 371-400.
- Shavell Steven & Spier Kathryn E., 2002. "Threats Without Binding Commitment," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 2(1), pages 1-11, January.
- Daron Acemoglu & James A. Robinson, 2002.
"Economic Backwardness in Political Perspective,"
NBER Working Papers
8831, National Bureau of Economic Research, Inc.
- Raghuram G. Rajan & Luigi Zingales, 1999.
"The Tyranny of Inequality,"
CRSP working papers
423, Center for Research in Security Prices, Graduate School of Business, University of Chicago.
- R. Harrison Wagner, 1982. "Deterrence and Bargaining," Journal of Conflict Resolution, Peace Science Society (International), vol. 26(2), pages 329-358, June.
- Alastair Smith & Allan C. Stam, 2004. "Bargaining and the Nature of War," Journal of Conflict Resolution, Peace Science Society (International), vol. 48(6), pages 783-813, December.
When requesting a correction, please mention this item's handle: RePEc:oup:jleorg:v:24:y:2008:i:1:p:163-183. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Oxford University Press)or (Christopher F. Baum)
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.