Abstract

http://ssrn.com/abstract=673001
 
 

References (59)



 
 

Citations (9)



 


 



A Theory of Brinkmanship, Conflicts, and Commitments


Michael A. Schwarz


Harvard University - Department of Economics

Konstantin Sonin


Higher School of Economics; Centre for Economic Policy Research (CEPR)

December 20, 2004

Journal of Law, Economics, and Organization, Vol. 24, No. 1, pp. 161-183, 2008

Abstract:     
Many conflicts and negotiations can be viewed as a dynamic game, where parties have no commitment power. In our model, a potential aggressor demands concessions from the weaker party by threatening a war. The absence of commitment makes a continuous stream of transfers a more effective appeasement strategy than a lump sum transfer. Based on such a strategy, it is possible to construct a self-enforcing peace agreement between risk-neutral parties, even if transfers shift the balance of power. When parties are risk-averse, a self-enforcing peace agreement may not be feasible. The bargaining power of the potential aggressor increases dramatically if she is able to make probabilistic threats, e.g. by taking an observable action that leads to war with positive probability. This 'brinkmanship strategy' allows a blackmailer to extract a positive stream of payments from the victim even if carrying out the threat is harmful to both parties. Our results are applicable to environments ranging from diplomacy to negotiations within or among firms, and are aimed to bring together 'parallel' investigations in the nature of commitment in economics and political science.

Number of Pages in PDF File: 21

Keywords: brinkmanship, conflicts, commitments, war and peace

JEL Classification: D74, C78

Accepted Paper Series


Download This Paper

Date posted: February 27, 2005 ; Last revised: October 9, 2009

Suggested Citation

Schwarz, Michael A. and Sonin, Konstantin, A Theory of Brinkmanship, Conflicts, and Commitments (December 20, 2004). Journal of Law, Economics, and Organization, Vol. 24, No. 1, pp. 161-183, 2008. Available at SSRN: http://ssrn.com/abstract=673001

Contact Information

Michael A. Schwarz
Harvard University - Department of Economics ( email )
Littauer Center
Cambridge, MA 02138
United States
617-496-0832 (Phone)
617-495-8570 (Fax)
Konstantin Sonin (Contact Author)
Higher School of Economics ( email )
20 Myasnitskaya street
Moscow, 119017
Russia

Centre for Economic Policy Research (CEPR)
77 Bastwick Street
London, EC1V 3PZ
United Kingdom
Feedback to SSRN


Paper statistics
Abstract Views: 3,035
Downloads: 344
Download Rank: 44,179
References:  59
Citations:  9

© 2014 Social Science Electronic Publishing, Inc. All Rights Reserved.  FAQ   Terms of Use   Privacy Policy   Copyright   Contact Us
This page was processed by apollo8 in 0.344 seconds