Bargaining and War: A Review of Some Formal Models

Sandeep Baliga () and Tomas Sjostrom

Korean Economic Review, 2013, vol. 29, 235-266

Abstract: Would perfectly rational agents always negotiate peaceful outcomes at the bargaining table, or would they sometimes fight costly wars? The Coase theorem suggests that when rational agents negotiate freely, they will reach a surplus-maximizing outcome. This seems to rule out war, since war will not in general be surplus-maximizing. However, the Coase theorem is valid only under certain assumptions, such as transferable utility (no restrictions on side-payments) and complete information. Brito and Intriligator (1985) showed how incomplete information may lead to war. An aggressor who demands concessions may simply be bluffing, so it may be rational to refuse his demands. If the aggressor is not bluffing, a war may ensue. We discuss how long such a war may last, and whether other kinds of ��frictions�� (such as limited commitment power and limits on side-payments) may also lead to war.

Keywords: Bargaining; War (search for similar items in EconPapers)
JEL-codes: F51 (search for similar items in EconPapers)
Date: 2013
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (10)

Downloads: (external link)
http://keapaper.kea.ne.kr/RePEc/kea/keappr/KER-20131231-29-2-01.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:kea:keappr:ker-20131231-29-2-01

Access Statistics for this article

Korean Economic Review is currently edited by Kyung Hwan Baik

More articles in Korean Economic Review from Korean Economic Association Contact information at EDIRC.
Bibliographic data for series maintained by KEA ().