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A Very Simple Model of Conflict with Asymmetric Evaluations and Institutional Constraint

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  • Raul Caruso

    (Università Cattolica del Sacro cuore)

Abstract

This paper considers a partial equilibrium model of conflict where two asymmetric, rational and risk-neutral opponents conflict in order to appropriate a positive fraction of a stake. An institutional constraint is modelled through an exogenously fixed element as a feature of a modified Contest Success Function. However, this very simple model shows that even if conflicting agents are willing to commit themselves to ease the conflict joining an institutional setting they do not ‘disarm’. The findings of the model show that: (a) both agents prefer to settle under an institutional constraint if and only if an exogenous institutional fee is fixed under a critical value; (b) the critical value of the institutional fee is directly related to the evaluation of the stake each agent does retain; (c) the agents with a higher evaluation of the stake has a higher willingness to settle.

Suggested Citation

  • Raul Caruso, 2005. "A Very Simple Model of Conflict with Asymmetric Evaluations and Institutional Constraint," Public Economics 0510011, University Library of Munich, Germany.
  • Handle: RePEc:wpa:wuwppe:0510011
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    File URL: https://econwpa.ub.uni-muenchen.de/econ-wp/pe/papers/0510/0510011.pdf
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    References listed on IDEAS

    as
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    6. Dixit, Avinash K, 1987. "Strategic Behavior in Contests," American Economic Review, American Economic Association, vol. 77(5), pages 891-898, December.
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    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Conflict; asymmetric evaluations; contest success function; institutional constraint;
    All these keywords.

    JEL classification:

    • D7 - Microeconomics - - Analysis of Collective Decision-Making
    • D74 - Microeconomics - - Analysis of Collective Decision-Making - - - Conflict; Conflict Resolution; Alliances; Revolutions
    • D0 - Microeconomics - - General
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design

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