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The UN in the lab

Author

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  • Malcolm Kass
  • Enrique Fatas
  • Catherine Eckel
  • Daniel Arce

Abstract

We consider two alternatives to inaction for governments combating terrorism, which we term Defense and Prevention. Defense consists of investing in resources that reduce the impact of an attack, and generates a negative externality to other governments, making their countries a more attractive objective for terrorists. In contrast, Prevention, which consists of investing in resources that reduce the ability of the terrorist organization to mount an attack, creates a positive externality by reducing the overall threat of terrorism for all. This interaction is captured using a simple $$3\times 3$$ 3 × 3 “Nested Prisoner’s Dilemma” game, with a single Nash equilibrium where both countries choose Defense. Due to the structure of this interaction, countries can benefit from coordination of policy choices, and international institutions (such as the UN) can be utilized to facilitate coordination by implementing agreements to share the burden of Prevention. We introduce an institution that implements a burden-sharing policy for Prevention, and investigate experimentally whether subjects coordinate on a cooperative strategy more frequently under different levels of cost sharing. In all treatments, burden sharing leaves the Prisoner’s Dilemma structure and Nash equilibrium of the game unchanged. We compare three levels of burden sharing to a baseline in a between-subjects design, and find that burden sharing generates a non-linear effect on the choice of the efficient Prevention strategy and overall performance. Only an institution supporting a high level of mandatory burden sharing generates a significant improvement in the use of the Prevention strategy. Copyright The Author(s) 2015

Suggested Citation

  • Malcolm Kass & Enrique Fatas & Catherine Eckel & Daniel Arce, 2015. "The UN in the lab," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 45(3), pages 625-651, October.
  • Handle: RePEc:spr:sochwe:v:45:y:2015:i:3:p:625-651
    DOI: 10.1007/s00355-014-0807-x
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    References listed on IDEAS

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    1. Maija Halonen-Akatwijuka & Oliver Hart, 2015. "Continuing Contracts," Bristol Economics Discussion Papers 15/665, School of Economics, University of Bristol, UK, revised 12 Oct 2016.

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