Conflict and Conflict Management with Interdependent Instruments and Asymmetric Stakes, the Bad-Cop and the Good-Cop Game

Abstract:     
This paper considers a partial equilibrium model of conflict where two asymmetric, rational and risk-neutral opponents clash in order to redistribute a divisible prize in their favour. Differently from common contest models agents have the option of choosing a second instrument to affect the outcome of the conflict. The second instrument is assumed to capture a complex bundle of Conflict Management Procedures (CMPs). Through comparative statics, different scenarios are studied. A Potential Settlement Region (PSR) is presented as the set of all possible settlement points. First, the role of asymmetry in the evaluation of the contested stake has been underlined. The agent with the lower evaluation will expend efforts in conflict management only when the asymmetry is extremely large. When agents are asymmetrical both in evaluation of the stake and in fighting abilities, there is also a smaller PSR. Once the destruction parameter is considered, agents clearly also take into account the opportunity cost of the conflict and enlarge a PSR. Finally, throughout the paper, the concept of entropy has been applied as a tool for the measurement and evaluation of conflict and conflict management.

Number of Pages in PDF File: 51

Keywords: Conflict, Contest, Conflict management, Asymmetry in evaluation, statistical entropy, uncertainty.

JEL Classification: D7, D72, D74, D74, D82

working papers series