Conflict and the Social Contract

We consider social contracts for resolving conflicts between two agents who are uncertain about each other's fighting potential. Applications include international conflict, litigation and elections. Even though only a peaceful agreement avoids a loss of resources, if this loss is small enough,...

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Bibliographic Details
Published inThe Scandinavian journal of economics Vol. 108; no. 2; pp. 231 - 249
Main Authors Bester, Helmut, Wärneryd, Karl
Format Journal Article
LanguageEnglish
Published Oxford, UK Blackwell Publishing Ltd 01.07.2006
Blackwell Publishers
Wiley Blackwell
SeriesScandinavian Journal of Economics
Subjects
Asymmetric information
C78
Conflict
Contracts
D72
D74
D82
Economic efficiency
Economic models
H21
H23
Information asymmetry
Litigation
Mechanism design
Microeconomics
Philosophy of science
Property rights
Representative agent
Social contract
social contracts
Surplus
Trade
War conflict
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Summary:We consider social contracts for resolving conflicts between two agents who are uncertain about each other's fighting potential. Applications include international conflict, litigation and elections. Even though only a peaceful agreement avoids a loss of resources, if this loss is small enough, then any contract must assign a positive probability of conflict. We show how the likelihood of conflict outbreak depends on the distribution of power between the agents and their information about each other.
Bibliography:istex:B34285A714996162A5801DC0AB87B6022C6B4E82
ArticleID:SJOE452
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We acknowledge the support of the European Commission through HCM network grant no. CHRX-CT94-0489. Bester also acknowledges support from the DFG through SFB/TR15; Wärneryd also thanks the Bank of Sweden Tercentenary Foundation for financial support. We are grateful to participants at the 1998 Public Choice Society meeting in New Orleans, the JST conference on Game Theory and International Cooperation in Kyoto, and several seminar presentations for helpful remarks. Special thanks are due to Tore Ellingsen, Martin Hellwig, Benny Moldovanu, Roger Myerson, two anonymous referees and the late Jeff Banks.
We acknowledge the support of the European Commission through HCM network grant no. CHRX‐CT94‐0489. Bester also acknowledges support from the DFG through SFB/TR15; Wärneryd also thanks the Bank of Sweden Tercentenary Foundation for financial support. We are grateful to participants at the 1998 Public Choice Society meeting in New Orleans, the JST conference on Game Theory and International Cooperation in Kyoto, and several seminar presentations for helpful remarks. Special thanks are due to Tore Ellingsen, Martin Hellwig, Benny Moldovanu, Roger Myerson, two anonymous referees and the late Jeff Banks.
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ISSN:0347-0520
1467-9442
1467-9442
DOI:10.1111/j.1467-9442.2006.00452.x