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Incentives for Peace

28 Pages Posted: 1 Feb 2015  

Santiago Caicedo

University of Chicago, Department of Economics, Students

Date Written: December 11, 2014


Why are some peace agreements successful while others fail? In this paper I study under what conditions there exist successful peace contracts that guarantee peace as the unique equilibrium of an ongoing civil conflict. I develop a model where a government and a rebel group simultaneously decide whether they want to fight or not to gain control over some territory. If they fight they choose their military capacity that jointly determines the territory they control. If they don't fight their military capacity and territory control is determined by an exogenous peace contract. I show that if the agents only care about the fraction of territory they control, there are no peace contracts that make peace the unique equilibrium of the conflict game. In contrast successful peace contracts are possible when: i) agents sufficiently care about consumption, ii) the benefits of peace are large enough in comparison to the rents of war, and iii) the peace contract implies a partial disarmament of the player with the least territory control during war, although total disarmament is not always possible.

Keywords: Peace agreements, peace contracts, commitment, conflict resolution, rational war

JEL Classification: C72, D74

Suggested Citation

Caicedo, Santiago, Incentives for Peace (December 11, 2014). Available at SSRN:

Santiago Caicedo (Contact Author)

University of Chicago, Department of Economics, Students ( email )

Chicago, IL
United States

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