Intimidation: Linking Negotiation and Conflict

40 Pages Posted: 21 Apr 2015 Last revised: 4 Jun 2018

Sambuddha Ghosh

Boston University - Department of Economics

Gabriele Gratton

UNSW Australia Business School, School of Economics

Caixia Shen

Shanghai University of Finance and Economics - School of International Business Administration

Date Written: April 9, 2018

Abstract

A challenger wants a resource initially held by a defender, who can negotiate a settlement by offering to share the resource. If challenger rejects, conflict ensues. During conflict each player could be a tough type for whom fighting is costless. Therefore non-concession intimidates the opponent into conceding. Unlike in models where negotiations happen in the shadow of exogenously specified conflicts, the rejected offer determines how conflict is played if negotiations fail. In turn, how players are expected to play during conflict determines their negotiating positions. In equilibrium, negotiations always fail with positive probability, even if players face a high cost of conflict. Allowing multiple offers leads to brinkmanship—the only acceptable offer is the one made when conflict is imminent. If negotiations fail, conflict is prolonged and non-duration dependent.

Keywords: Intimidation, reputation, terrorism, negotiation, brinkmanship, costly war-of-attrition

JEL Classification: D74, D82

Suggested Citation

Ghosh, Sambuddha and Gratton, Gabriele and Shen, Caixia, Intimidation: Linking Negotiation and Conflict (April 9, 2018). UNSW Business School Research Paper. Available at SSRN: https://ssrn.com/abstract=2593620 or http://dx.doi.org/10.2139/ssrn.2593620

Sambuddha Ghosh

Boston University - Department of Economics ( email )

270 Bay State Road
Boston, MA 02215
United States

Gabriele Gratton (Contact Author)

UNSW Australia Business School, School of Economics ( email )

High Street
Sydney, NSW 2052
Australia

Caixia Shen

Shanghai University of Finance and Economics - School of International Business Administration ( email )

777 Guo-ding Road
Shanghai, 200433
China

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