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Conflict and the Social Contract Export

Scandinavian Journal of Economics, Vol. 108, No. 2. (July 2006), pp. 231-249.

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art_misperceptions asymmetric_information bargaining conflict

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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.


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