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A Very Simple Model of Conflict with Asymmetric Evaluations and Institutional Constraint

Raul Caruso ()

Public Economics from EconWPA

Abstract: This paper considers a partial equilibrium model of conflict where two asymmetric, rational and risk-neutral opponents conflict in order to appropriate a positive fraction of a stake. An institutional constraint is modelled through an exogenously fixed element as a feature of a modified Contest Success Function. However, this very simple model shows that even if conflicting agents are willing to commit themselves to ease the conflict joining an institutional setting they do not ‘disarm’. The findings of the model show that: (a) both agents prefer to settle under an institutional constraint if and only if an exogenous institutional fee is fixed under a critical value; (b) the critical value of the institutional fee is directly related to the evaluation of the stake each agent does retain; (c) the agents with a higher evaluation of the stake has a higher willingness to settle.

Keywords: Conflict; asymmetric evaluations; contest success function; institutional constraint (search for similar items in EconPapers)
JEL-codes: D7 D74 D0 D82 (search for similar items in EconPapers)
Date: 2005-10-12
Note: Type of Document - pdf; pages: 12
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