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ifo Institut – Leibniz-Institut für Wirtschaftsforschung an der Universität München >
CESifo Working Papers, CESifo Group Munich >
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http://hdl.handle.net/10419/26306
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| Title: | | The paradoxes of revenge in conflicts  |
| Authors: | | Amegashie, J. Atsu Runkel, Marco |
| Issue Date: | | 2008 |
| Series/Report no.: | | CESifo working paper 2261 |
| Abstract: | | We consider a differential game of a conflict between two factions who both have a desire to exact revenge. We show that, in contrast to conventional wisdom, the desire for revenge need not lead to escalation of conflicts. Surprisingly, in the open-loop equilibrium, the weaker faction exerts a higher effort when the stronger factions military capability increases. This result is not possible in the absence of a desire for revenge. The closed-loop equilibrium is characterized by a self-deterrence effect: Anticipating the future retaliation of the opponent, a faction has an incentive to exert lower effort today. This strengthens the tendency to a stable steady state and paradoxically may decrease the factions effort below the levels exerted in the case without revenge. We discuss some applications of our results and also offer an explanation of a puzzling empirical result obtained by Jaeger and Paserman (2007) in their study of the Israeli-Palestinian conflict. We also discuss the implications of revenge-dependent preferences for welfare economics and their strategic value as commitment devices. |
| Subjects: | | conflict commitment differential game revenge |
| JEL: | | D74 |
| Document Type: | | Working Paper |
| Appears in Collections: | | CESifo Working Papers, CESifo Group Munich
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