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Reciprocity in the shadow of threat

  • Raul Caruso

    ()

This paper considers a partial equilibrium model of conflict where two asymmetric, rational and risk-neutral opponents evaluate differently a 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 the asymmetry in the evaluation of the stake does constitute a powerful force influencing agents’ behaviour. In particular, (a) whenever the asymmetry in the evaluation of the stake is extremely large there is no room for cooperation and a conflict trap emerges; (b) whenever the degree of asymmetry falls within a critical interval cooperation seems to emerge even if only the agent with the higher evaluation of the stake makes a concession, proportional to the optimal choice of ‘talks’; (c) as the evaluations of the stake converge only reciprocal concessions (capturing a kind of strong reciprocity) made by both agents can pave the way for cooperation. In such a case, the existence of reciprocal concessions paves the way for establishing a potential settlement region (PSR) given that both parties can be better off while expending resources in ‘talks’. Finally, throughout the paper, the concept of entropy is applied as a tool for the measurement and evaluation of conflict and conflict management.

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File URL: http://hdl.handle.net/10.1007/s12232-007-0029-y
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Article provided by Springer in its journal International Review of Economics.

Volume (Year): 55 (2008)
Issue (Month): 1 (April)
Pages: 91-111

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Handle: RePEc:spr:inrvec:v:55:y:2008:i:1:p:91-111
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