Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/77788
Authors: 
Ponsati, Clara
Sanchez-Pages, Santiago
Year of Publication: 
2012
Citation: 
[Journal:] SERIEs - Journal of the Spanish Economic Association [ISSN:] 1869-4195 [Publisher:] Springer [Place:] Heidelberg [Volume:] 3 [Year:] 2012 [Issue:] 1/2 [Pages:] 157-179
Abstract: 
We propose an elementary theory of wars fought by fully rational contenders that features three of the main rationalist explanations for armed conflicts: uncertainty, commitment, and indivisibility. Two parties play a Markov game that combines stages of bargaining, where offers are made, with claim stages, where one side can commit to impose surrender on the other. Under uncertainty on the persistence of claims, long confrontations occur in the unique equilibrium of the game: war arises when reality disappoints initial (rational) optimism, and it persists when both agents are optimists but reality proves both wrong. Bargaining proposals that are rejected initially might eventually be accepted after several periods of confrontation. We provide an explicit computation of the equilibrium, evaluating the probability of war, and its expected losses as a function of (i) the costs of confrontation, (ii) the asymmetry of the split imposed under surrender, and (iii) the strengths of contenders at attack and defense. Changes in these parameters display non-monotonic effects.
Subjects: 
bargaining
incomplete information
commitment
indivisibilities
war
JEL: 
C78
D74
Persistent Identifier of the first edition: 
Creative Commons License: 
http://creativecommons.org/licenses/by/2.0/
Document Type: 
Article

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