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Mediation and Peace

Author

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  • Johannes Horner
  • Massimo Morelli
  • Francesco Squintani

Abstract

This paper applies mechanism design to the study of international con flict resolution. Standard mechanisms in which an arbitrator can enforce her decisions are usually not feasible because disputants are sovereign entities. Nevertheless, we find that this limitation is inconsequential. Despite only being capable of making unenforceable recommendations, mediators can be equally effective as arbitrators. By using recommendation strategies that do not reveal that one player is weak to a strong opponent, a mediator can effectively circumvent the unenforceability constraint. This is because these strategies make the strong player agree to recommendations that yield the same payoff as arbitration in expectation. This result relies on the capability of mediators to collect confidential information from the disputants, before making their recommendations. Simple protocols of unmediated communication cannot achieve the same level of ex ante welfare, as they preclude confidentiality.

Suggested Citation

  • Johannes Horner & Massimo Morelli & Francesco Squintani, 2015. "Mediation and Peace," Working Papers 541, IGIER (Innocenzo Gasparini Institute for Economic Research), Bocconi University.
  • Handle: RePEc:igi:igierp:541
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    References listed on IDEAS

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    Cited by:

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    2. Goltsman, Maria & Pavlov, Gregory, 2014. "Communication in Cournot oligopoly," Journal of Economic Theory, Elsevier, vol. 153(C), pages 152-176.
    3. Kimbrough, Erik O. & Laughren, Kevin & Sheremeta, Roman, 2020. "War and conflict in economics: Theories, applications, and recent trends," Journal of Economic Behavior & Organization, Elsevier, vol. 178(C), pages 998-1013.
    4. Mostafa Beshkar & Jee-Hyeong Park, 2017. "Dispute Settlement with Second-Order Uncertainty: The Case of International Trade Disputes," CAEPR Working Papers 2017-010, Center for Applied Economics and Policy Research, Department of Economics, Indiana University Bloomington.
    5. Herbst, Luisa & Konrad, Kai A. & Morath, Florian, 2017. "Balance of power and the propensity of conflict," Games and Economic Behavior, Elsevier, vol. 103(C), pages 168-184.
    6. Correia-da-Silva, João, 2020. "Self-rejecting mechanisms," Games and Economic Behavior, Elsevier, vol. 120(C), pages 434-457.
    7. Mueller, Hannes Felix & Rauh, Christopher, 2019. "The Hard Problem of Prediction for Conflict Prevention," CEPR Discussion Papers 13748, C.E.P.R. Discussion Papers.
    8. Zheng, Charles Z., 2019. "Necessary and sufficient conditions for peace: Implementability versus security," Journal of Economic Theory, Elsevier, vol. 180(C), pages 135-166.
    9. Wolton, Stephane, 2018. "Signaling in the shadow of conflict," MPRA Paper 83922, University Library of Munich, Germany.
    10. Iaryczower, Matias & Oliveros, Santiago, 2016. "Power brokers: Middlemen in legislative bargaining," Journal of Economic Theory, Elsevier, vol. 162(C), pages 209-236.
    11. Ganguly, Chirantan & Ray, Indrajit, 2015. "Information-Revelation and Coordination Using Cheap Talk in a Game with Two-Sided Private Information," Cardiff Economics Working Papers E2015/7, Cardiff University, Cardiff Business School, Economics Section.
    12. Corchón, Luis C. & Yıldızparlak, Anıl, 2013. "Give peace a chance: The effect of ownership and asymmetric information on peace," Journal of Economic Behavior & Organization, Elsevier, vol. 92(C), pages 116-126.
    13. Meirowitz, Adam & Morelli, Massimo & Ramsay, Kristopher & Squintani, Francesco, 2019. "Third Party Intervention and Strategic Militarization," CEPR Discussion Papers 13879, C.E.P.R. Discussion Papers.
    14. Kim, Jin Yeub, 2017. "Interim third-party selection in bargaining," Games and Economic Behavior, Elsevier, vol. 102(C), pages 645-665.
    15. Catalina Tejada & Eliana Ferrara & Henrik Kleven & Florian Blum & Oriana Bandiera & Michel Azulai, 2015. "State Effectiveness, Growth, and Development," Working Papers id:6668, eSocialSciences.

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    JEL classification:

    • C7 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory

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