Conflict and Uncertainty: A Dynamic Approach

28 Pages Posted: 18 Feb 2010

See all articles by Miguel Andrés Espinosa

Miguel Andrés Espinosa

Universidad de los Andes, Colombia - Department of Economics

Juan David Prada Sarmiento

Central Bank of Colombia

Date Written: January 22, 2010

Abstract

Most of the conflict theory papers have used a one-shot game set-up. This does not correspond to reality and is certainly incapable of modeling real conflict situations. We propose a dynamic model with N-agents in an infinite time frame which allow us to adequately analyze conflicts. The dynamic aspects of the conflict come at least from two sources: first, the preferences on the good in dispute are not static; second, agents in conflict can influence the future of the conflict by making investment in conflict's technology. We use a simple deterministic rule that defines the evolution of the subjective valuation for the good in dispute according to the results obtained by the agents in the recent past. During each period the realization of stochastic variables of the nature's states induces uncertainty in the game. The model is a theoretical approach that can be applied to evaluate the role of uncertainty and valuations' evolution on the optimal choices of forward-looking economic agents that seek to appropriate a share of a divisible resource.

Keywords: Conflict Theory, Dynamic Economic Model, Uncertainty

JEL Classification: C70, D70, D81, D84

Suggested Citation

Espinosa, Miguel Andrés and Prada Sarmiento, Juan David, Conflict and Uncertainty: A Dynamic Approach (January 22, 2010). Documento CEDE No. 2010-06, Available at SSRN: https://ssrn.com/abstract=1554485 or http://dx.doi.org/10.2139/ssrn.1554485

Miguel Andrés Espinosa (Contact Author)

Universidad de los Andes, Colombia - Department of Economics ( email )

Carrera 1a No. 18A-10
Santafe de Bogota, AA4976
Colombia

Juan David Prada Sarmiento

Central Bank of Colombia ( email )

Carrera 7 #14-78
Bogota
Colombia

HOME PAGE: http://www.banrep.gov.co

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