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

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Listed:
  • 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
    Note: Type of Document - pdf; pages: 12
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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
    1. Anderson, James E. & Marcouiller, S.J. Douglas, 1997. "Trade and Security, I: Anarchy," Working Paper Series 477, Research Institute of Industrial Economics.
    2. Raul Caruso, 2004. "A Trade Institution as a Peaceful Institution?," Others 0406003, University Library of Munich, Germany, revised 02 May 2005.
    3. Anderton, Charles H & Anderton, Roxane A & Carter, John R, 1999. "Economic Activity in the Shadow of Conflict," Economic Inquiry, Western Economic Association International, vol. 37(1), pages 166-179, January.
    4. Garfinkel, M.R. & Skaperdas, S., 2000. "Conflict without Misperceptions or Incomplete Information: how the Future Matters," Papers 99-00-11, California Irvine - School of Social Sciences.
    5. Dixit, Avinash K, 1987. "Strategic Behavior in Contests," American Economic Review, American Economic Association, vol. 77(5), pages 891-898, December.
    6. Christian Riis & Derek J. Clark, 1997. "Contest success functions: an extension," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 11(1), pages 201-204.
    7. Grossman, Herschel I & Kim, Minseong, 1995. "Swords or Plowshares? A Theory of the Security of Claims to Property," Journal of Political Economy, University of Chicago Press, vol. 103(6), pages 1275-1288, December.
    8. Garfinkel, Michelle R, 1994. "Domestic Politics and International Conflict," American Economic Review, American Economic Association, vol. 84(5), pages 1294-1309, December.
    9. Grossman, Herschel I, 1991. "A General Equilibrium Model of Insurrections," American Economic Review, American Economic Association, vol. 81(4), pages 912-921, September.
    10. Anderton, Charles H., 1999. "Appropriation possibilities in a simple exchange economy," Economics Letters, Elsevier, vol. 63(1), pages 77-83, April.
    11. Garfinkel, Michelle R, 1990. "Arming as a Strategic Investment in a Cooperative Equilibrium," American Economic Review, American Economic Association, vol. 80(1), pages 50-68, March.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    Conflict; asymmetric evaluations; contest success function; institutional constraint;

    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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