The Elusive Quest for Disarmed Peace: Contest Games and International Relations

Johann Caro-Burnett, Sebastian Galiani and Gustavo Torrens

No 31343, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: This paper extends the canonical security competition one-shot game by developing a dynamic framework where states can invest in a technology to eliminate their rival. The model includes a settlement stage for negotiation, stochastic contestable resources, and it assumes diplomacy never fails–so payoff-dominated equilibria are not played. Within this setting, we fully characterize equilibrium behavior for all discount factors, comparing cases with high and low elimination costs. The dynamic structure reveals why, even when states coordinate on the best possible equilibrium outcome, long-lasting disarmed peace is rare. By combining the escalation of military capabilities with the constraining implications of effective diplomacy, the model rationalizes the persistent cycles of peace, arms races, and conflict observed in history. Our approach identifies strategic mechanisms that restrict the sustainability of disarmament and clarifies the conditions under which arms races or conflict are inevitable. These findings offer a deeper understanding of the recurrent nature of international conflict under repeated interaction.

JEL-codes: F5 (search for similar items in EconPapers)
Date: 2023-06
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