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A Theory of Brinkmanship, Conflicts, and Commitments

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  • Konstantin Sonin

Abstract

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: journals.permissions@oxfordjournals.org, Oxford University Press.

Suggested Citation

  • Konstantin Sonin, 2008. "A Theory of Brinkmanship, Conflicts, and Commitments," Journal of Law, Economics, and Organization, Oxford University Press, vol. 24(1), pages 163-183, May.
  • Handle: RePEc:oup:jleorg:v:24:y:2008:i:1:p:163-183
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    File URL: http://hdl.handle.net/10.1093/jleo/ewm038
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Daron Acemoglu & Georgy Egorov & Konstantin Sonin, 2012. "Dynamics and Stability of Constitutions, Coalitions, and Clubs," American Economic Review, American Economic Association, vol. 102(4), pages 1446-1476, June.
    2. Christian Fahrholz & Cezary Wójcik, 2010. "The Bail-Out! Positive Political Economics of Greek-type Crises in the EMU," CESifo Working Paper Series 3178, CESifo Group Munich.
    3. Johannes Hörner & Massimo Morelli & Francesco Squintani, 2015. "Mediation and Peace," Review of Economic Studies, Oxford University Press, vol. 82(4), pages 1483-1501.
    4. Ortner, Juan, 2017. "A theory of political gridlock," Theoretical Economics, Econometric Society, vol. 12(2), May.
    5. repec:eee:joepsy:v:63:y:2017:i:c:p:184-198 is not listed on IDEAS
    6. Matthew O. Jackson & Massimo Morelli, 2011. "The Reasons for Wars: An Updated Survey," Chapters,in: The Handbook on the Political Economy of War, chapter 3 Edward Elgar Publishing.
    7. Yared, Pierre, 2010. "A dynamic theory of war and peace," Journal of Economic Theory, Elsevier, vol. 145(5), pages 1921-1950, September.
    8. Daron Acemoglu & Mikhail Golosov & Aleh Tsyvinski & Pierre Yared, 2012. "A Dynamic Theory of Resource Wars," The Quarterly Journal of Economics, Oxford University Press, vol. 127(1), pages 283-331.
    9. Skali, Ahmed, 2017. "Moralizing gods and armed conflict," Journal of Economic Psychology, Elsevier, vol. 63(C), pages 184-198.
    10. Matthew O. Jackson & Massimo Morelli, 2007. "Political Bias and War," American Economic Review, American Economic Association, vol. 97(4), pages 1353-1373, September.
      • Jackson, Matthew O. & Morelli, Massimo, "undated". "Political bias and war," Working Papers 1247, California Institute of Technology, Division of the Humanities and Social Sciences.

    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

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