When to Attack an Oppressive Government?
Initiating a conflict is an investment in social, political or economic change. The decision to attack is sequential in time, irreversible and, more important, includes highly uncertain and erratic threats and opportunities yet completely disregarded in confict theory. In this dynamic model of decision making we focus on the time dimension of an escalating conflict. In order to cover the effects of high uncertainties we extend methods in real option theory by introducing a discontinuous Ito-L vy Jump Diffusion processes. We analytically derive a threshold that triggers the attack and determine the expected time of action. With this new discontinuous processs we are able to show that an increasing number and intensity of oppressive government actions may lead to an earlier outbreak of conflict. However, even if latent conflicts are not immediately solved policies can prolong the peace period to find a long term solution to the conflict.
|Date of creation:||2012|
|Date of revision:|
|Contact details of provider:|| Web page: http://www.socialpolitik.org/|
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Tornell, A., 1998.
"Reform from Within,"
650, Harvard - Institute for International Development.
- Aaron Tornell, 1998. "Reform from Within," NBER Working Papers 6497, National Bureau of Economic Research, Inc.
- Aaron Tornell, 1998. "Reform from Within," Harvard Institute of Economic Research Working Papers 1827, Harvard - Institute of Economic Research.
- Geman, Helyette, 2002. "Pure jump Levy processes for asset price modelling," Journal of Banking & Finance, Elsevier, vol. 26(7), pages 1297-1316, July.
- James A Piazza, 2011. "Poverty, Minority Economic Discrimination, and Domestic Terrorism," Journal of Peace Research, Peace Research Institute Oslo, vol. 48(3), pages 339-353, May.
- Blattman, Christopher & Miguel, Edward, 2009.
Center for International and Development Economics Research, Working Paper Series
qt90n356hs, Center for International and Development Economics Research, Institute for Business and Economic Research, UC Berkeley.
- Collier, Paul & Hoeffler, Anke, 1998. "On Economic Causes of Civil War," Oxford Economic Papers, Oxford University Press, vol. 50(4), pages 563-73, October.
- Merton, Robert C., 1976.
"Option pricing when underlying stock returns are discontinuous,"
Journal of Financial Economics,
Elsevier, vol. 3(1-2), pages 125-144.
- Merton, Robert C., 1975. "Option pricing when underlying stock returns are discontinuous," Working papers 787-75., Massachusetts Institute of Technology (MIT), Sloan School of Management.
- Yared, Pierre, 2010. "A dynamic theory of war and peace," Journal of Economic Theory, Elsevier, vol. 145(5), pages 1921-1950, September.
- Nicholas Bloom, 2007.
"The Impact of Uncertainty Shocks,"
NBER Working Papers
13385, National Bureau of Economic Research, Inc.
- Claude Berrebi & Jordan Ostwald, 2011. "Earthquakes, hurricanes, and terrorism: do natural disasters incite terror?," Public Choice, Springer, vol. 149(3), pages 383-403, December.
- Grossman, Herschel I, 1991. "A General Equilibrium Model of Insurrections," American Economic Review, American Economic Association, vol. 81(4), pages 912-21, September.
- Ernesto Mordecki, 2002. "Optimal stopping and perpetual options for Lévy processes," Finance and Stochastics, Springer, vol. 6(4), pages 473-493.
- Blomberg, S. Brock & Hess, Gregory D. & Weerapana, Akila, 2004. "Economic conditions and terrorism," European Journal of Political Economy, Elsevier, vol. 20(2), pages 463-478, June.
- Powell, Robert, 2006. "War as a Commitment Problem," International Organization, Cambridge University Press, vol. 60(01), pages 169-203, January.
When requesting a correction, please mention this item's handle: RePEc:zbw:vfsc12:62031. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (ZBW - German National Library of Economics)
If references are entirely missing, you can add them using this form.