Mechanism design goes to war: Peaceful outcomes with interdependent and correlated types

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Abstract

In this paper, we consider the possibility of identifying peaceful mechanisms such as bargaining protocols, international institutions, or norms that can enable countries to settle disputes in the absence of binding contracts. In particular, we are interested in the existence of mechanisms with zero probability of war. Here, we focus on situations where the countries' payoffs to war are interdependent or correlated and where efficient settlements are not required but subsidies are unavailable. Most importantly, countries can choose to go to war at any time and can use information learned from the negotiation process in making this choice. We characterize the conditions under which no peaceful mechanisms exist and discuss how weakening our war consistency condition can change this result.

Original languageEnglish (US)
Pages (from-to)233-250
Number of pages18
JournalReview of Economic Design
Volume13
Issue number3
DOIs
StatePublished - Aug 2009

All Science Journal Classification (ASJC) codes

  • Economics, Econometrics and Finance(all)

Keywords

  • Conflict
  • Mechanism design
  • Private information
  • War
  • War consistency

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