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Bargaining power in crisis bargaining

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  • Bahar Leventoğlu

    (Duke University)

Abstract

A large body of game-theoretic work examines the process by which uncertainty can lead to inefficient war. In a typical crisis bargaining model, players negotiate according to a pre-specified game form and no player has the ability to change the rules of the game. However, when one of the parties has full bargaining power and is able to set the rules of the game on her own, the game itself becomes an endogenous decision variable. I formulate this problem in a principal-agent framework. I show that both the likelihood of costly war and the exact mechanism that yields it depend on the nature of the informational problem and the identity of the informed player.

Suggested Citation

  • Bahar Leventoğlu, 2023. "Bargaining power in crisis bargaining," Review of Economic Design, Springer;Society for Economic Design, vol. 27(4), pages 825-847, December.
    • Handle: RePEc:spr:reecde:v:27:y:2023:i:4:d:10.1007_s10058-022-00325-3
    DOI: 10.1007/s10058-022-00325-3
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    References listed on IDEAS

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    1. Myerson, Roger B, 1979. "Incentive Compatibility and the Bargaining Problem," Econometrica, Econometric Society, vol. 47(1), pages 61-73, January.
    2. Powell, Robert, 1996. "Bargaining in the Shadow of Power," Games and Economic Behavior, Elsevier, vol. 15(2), pages 255-289, August.
    3. Fearon, James D., 1995. "Rationalist explanations for war," International Organization, Cambridge University Press, vol. 49(3), pages 379-414, July.
    4. Schultz, Kenneth A., 1998. "Domestic Opposition and Signaling in International Crises," American Political Science Review, Cambridge University Press, vol. 92(4), pages 829-844, December.
    5. Maskin, Eric & Tirole, Jean, 1992. "The Principal-Agent Relationship with an Informed Principal, II: Common Values," Econometrica, Econometric Society, vol. 60(1), pages 1-42, January.
    6. Maskin, Eric & Tirole, Jean, 1990. "The Principal-Agent Relationship with an Informed Principal: The Case of Private Values," Econometrica, Econometric Society, vol. 58(2), pages 379-409, March.
    7. Slantchev, Branislav L., 2003. "The Principle of Convergence in Wartime Negotiations," American Political Science Review, Cambridge University Press, vol. 97(4), pages 621-632, November.
    8. Reed, William, 2003. "Information, Power, and War," American Political Science Review, Cambridge University Press, vol. 97(4), pages 633-641, November.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Crisis bargaining; Information asymmetry; Principal-agent framework;
    All these keywords.

    JEL classification:

    • C7 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory
    • D8 - Microeconomics - - Information, Knowledge, and Uncertainty

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