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Conflict and the Social Contract

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  • Bester, Helmut
  • Wärneryd, Karl

Abstract

We consider social contracts for resolving conflicts between two agents who are uncertain about each other's fighting potential. Applications include international conflict, litigation, and elections. Even though only a peaceful agreement avoids a loss of resources, if this loss is small enough, then any contract must assign a positive probability of conflict. We show how the likelihood of conflict outbreak depends on the distribution of power between the agents and their information about each other.

Suggested Citation

  • 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.
    • Handle: RePEc:trf:wpaper:94
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    Cited by:

    1. Stergios Skaperdas, 2006. "Bargaining Versus Fighting," Defence and Peace Economics, Taylor & Francis Journals, vol. 17(6), pages 657-676.
    2. Mark Fey & Kristopher Ramsay, 2009. "Mechanism design goes to war: peaceful outcomes with interdependent and correlated types," Review of Economic Design, Springer;Society for Economic Design, vol. 13(3), pages 233-250, September.
    3. Zheng, Charles Z., 2019. "Necessary and sufficient conditions for peace: Implementability versus security," Journal of Economic Theory, Elsevier, vol. 180(C), pages 135-166.
    4. Jingfeng Lu & Zongwei Lu & Christian Riis, 2021. "Peace through bribing," Papers 2107.11575, arXiv.org, revised Apr 2023.
    5. Clara Ponsati & Santiago Sanchez-Pages, 2012. "Optimism and commitment: an elementary theory of bargaining and war," SERIEs: Journal of the Spanish Economic Association, Springer;Spanish Economic Association, vol. 3(1), pages 157-179, March.
    6. Johannes Hörner & Massimo Morelli & Francesco Squintani, 2015. "Mediation and Peace," Review of Economic Studies, Oxford University Press, vol. 82(4), pages 1483-1501.
    7. Long, Iain W., 2015. "Better feared than loved: Reputations and the motives for conflict," Journal of Economic Behavior & Organization, Elsevier, vol. 114(C), pages 46-61.
    8. Garfinkel, Michelle R. & Skaperdas, Stergios, 2007. "Economics of Conflict: An Overview," Handbook of Defense Economics, in: Keith Hartley & Todd Sandler (ed.), Handbook of Defense Economics, edition 1, volume 2, chapter 22, pages 649-709, Elsevier.
    9. McBride, Michael & Skaperdas, Stergios, 2014. "Conflict, settlement, and the shadow of the future," Journal of Economic Behavior & Organization, Elsevier, vol. 105(C), pages 75-89.
    10. Jin Yeub Kim, 2022. "Neutral public good mechanisms," PLOS ONE, Public Library of Science, vol. 17(4), pages 1-16, April.
    11. Adam Meirowitz & Massimo Morelli & Kristopher W. Ramsay & Francesco Squintani, 2019. "Dispute Resolution Institutions and Strategic Militarization," Journal of Political Economy, University of Chicago Press, vol. 127(1), pages 378-418.
    12. Roland Hodler & Paul Schaudt & Alberto Vesperoni, 2023. "Mining for Peace," CESifo Working Paper Series 10207, CESifo.
    13. Alberto Vesperoni & Anıl Yıldızparlak, 2019. "Inequality and conflict outbreak," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 53(1), pages 135-173, June.
    14. Stergios Skaperdas, 2008. "An economic approach to analyzing civil wars," Economics of Governance, Springer, vol. 9(1), pages 25-44, January.
    15. Long, Iain W, 2019. "Contests and Negotiation Between Hubristic Players," Cardiff Economics Working Papers E2019/17, Cardiff University, Cardiff Business School, Economics Section.
    16. Santiago Sánchez-Pagés, 2009. "Conflict as a Part of the Bargaining Process," Economic Journal, Royal Economic Society, vol. 119(539), pages 1189-1207, July.
    17. Benjamin Balzer & Johannes Schneider, 2021. "Managing a conflict: optimal alternative dispute resolution," RAND Journal of Economics, RAND Corporation, vol. 52(2), pages 415-445, June.
    18. Santiago Sanchez-Pages, 2009. "Bargaining and Conflict with Incomplete Information," Edinburgh School of Economics Discussion Paper Series 191, Edinburgh School of Economics, University of Edinburgh.
    19. Vimal Kumar & Stergios Skaperdas, 2008. "On The Economics oF Organized Crime," Working Papers 070815, University of California-Irvine, Department of Economics.
    20. Tridimas, George, 2011. "The political economy of power-sharing," European Journal of Political Economy, Elsevier, vol. 27(2), pages 328-342, June.
    21. Libman, Alexander Mikhailovich, 2009. "Эндогенные Границы И Распределение Власти В Федерациях И Международных Сообществах [ENDOGENOUS BOUNDARIES AND DISTRIBUTION OF POWER In the Federation]," MPRA Paper 16473, University Library of Munich, Germany.
    22. Thomas Tangerås, 2009. "Democracy, autocracy and the likelihood of international conflict," Economics of Governance, Springer, vol. 10(2), pages 99-117, April.
    23. Kim, Jin Yeub, 2017. "Interim third-party selection in bargaining," Games and Economic Behavior, Elsevier, vol. 102(C), pages 645-665.
    24. Nathan Fiala & Stergios Skaperdas, 2011. "Economic Perspectives on Civil Wars," Chapters, in: Christopher J. Coyne & Rachel L. Mathers (ed.), The Handbook on the Political Economy of War, chapter 10, Edward Elgar Publishing.
    25. Raphaela Hennigs, 2019. "Conflict Prevention by Bayesian Persuasion," Working Papers tax-mpg-rps-2019-16_1, Max Planck Institute for Tax Law and Public Finance.

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    More about this item

    Keywords

    conflict; social contracts; asymmetric information;
    All these keywords.

    JEL classification:

    • C78 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Bargaining Theory; Matching Theory
    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • D74 - Microeconomics - - Analysis of Collective Decision-Making - - - Conflict; Conflict Resolution; Alliances; Revolutions
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation
    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies

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