Optimism and commitment: an elementary theory of bargaining and war
We propose an elementary theory of wars fought by fully rational contenders. Two parties play a Markov game that combines stages of bargaining with stages where one side has the ability to impose surrender on the other. Under uncertainty and incomplete information, in the unique equilibrium of the game, long confrontations occur: war arises when reality disappoints initial (rational) optimism, and it persist longer when both agents are optimists but reality proves both wrong. Bargaining proposals that are rejected initially might eventually be accepted after several periods of confrontation. We provide an explicit computation of the equilibrium, evaluating the probability of war, and its expected losses as a function of i) the costs of confrontation, ii) the asymmetry of the split imposed under surrender, and iii) the strengths of contenders at attack and defense. Changes in these parameters display non-monotonic effects.
(This abstract was borrowed from another version of this item.)
Volume (Year): 3 (2012)
Issue (Month): 1 (March)
|Contact details of provider:|| Postal: |
Phone: +34 94 6013783
Fax: + 34 94 6013774
Web page: http://www.springer.com/economics/journal/13209
More information through EDIRC
|Order Information:||Web: http://link.springer.de/orders.htm|
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.:
- Santiago Sanchez-Pages, 2009.
"Bargaining and Conflict with Incomplete Information,"
ESE Discussion Papers
191, Edinburgh School of Economics, University of Edinburgh.
- Sanchez-Pages, Santiago, 2009. "Bargaining and Conflict with Incomplete Information," SIRE Discussion Papers 2009-55, Scottish Institute for Research in Economics (SIRE).
- Santiago Sánchez-Pagés, 2009. "Conflict as a Part of the Bargaining Process," Economic Journal, Royal Economic Society, vol. 119(539), pages 1189-1207, 07.
- Merlo, Antonio & Wilson, Charles A, 1995. "A Stochastic Model of Sequential Bargaining with Complete Information," Econometrica, Econometric Society, vol. 63(2), pages 371-99, March.
- Fearon, James D., 1995. "Rationalist explanations for war," International Organization, Cambridge University Press, vol. 49(03), pages 379-414, June.
- Powell, Robert, 2006. "War as a Commitment Problem," International Organization, Cambridge University Press, vol. 60(01), pages 169-203, January.
- Matthew O. Jackson & Massimo Morelli, 2007.
"Political Bias and War,"
American Economic Review,
American Economic Association, vol. 97(4), pages 1353-1373, September.
- Carmen Beviá & Luis C. Corchón, 2008.
"Peace Agreements Without Commitment,"
340, Barcelona Graduate School of Economics.
- Powell, Robert, 1996. "Bargaining in the Shadow of Power," Games and Economic Behavior, Elsevier, vol. 15(2), pages 255-289, August.
- Garfinkel, Michelle R. & Skaperdas, Stergios (ed.), 2012. "The Oxford Handbook of the Economics of Peace and Conflict," OUP Catalogue, Oxford University Press, number 9780195392777, March.
- 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.
- Darren Filson & Suzanne Werner, . "A Bargaining Model of War and Peace: Anticipating the Onset, Duration, and Outcome of War," Claremont Colleges Working Papers 2001-02, Claremont Colleges.
- Bester, Helmut & Wärneryd, Karl, 2006.
"Conflict and the Social Contract,"
Discussion Paper Series of SFB/TR 15 Governance and the Efficiency of Economic Systems
94, Free University of Berlin, Humboldt University of Berlin, University of Bonn, University of Mannheim, University of Munich.
When requesting a correction, please mention this item's handle: RePEc:spr:series:v:3:y:2012:i:1:p:157-179. 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: (Guenther Eichhorn)or (Christopher F Baum)
If references are entirely missing, you can add them using this form.