Dispute resolution institutions and strategic militarization

Engagement in a destructive war can be understood as the “punish-ment” for entering into a dispute. Institutions that reduce the chance that disputes lead to war make this punishment less severe. This may in-centivize hawkish policies like militarization and potentially offset the benefits of peace brokering. We study a model in which unmediated peace talks are effective at improving the peace chance for given militarization but lead to more militarization and ultimately to a higher incidence of war. Instead, a form of third-party mediation inspired by work of Myerson effectively brokers peace in emerged disputes and also minimizes equilibrium militarization.