Intimidation: Linking Negotiation and Conflict

30 Pages Posted: 22 May 2020

See all articles by Sambuddha Ghosh

Sambuddha Ghosh

Boston University - Department of Economics

Gabriele Gratton

UNSW Australia Business School, School of Economics

Caixia Shen

Shanghai University of Finance and Economics

Multiple version iconThere are 2 versions of this paper

Date Written: November 2019

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, nonconcession intimidates the opponent into conceding. Unlike in models where negotiations happen in the shadow of exogenously specified conflicts, offers made during negotiations determine how conflict unfolds if negotiations fail. In turn, how conflict is expected to unfold determines the players' 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 not duration dependent.

Suggested Citation

Ghosh, Sambuddha and Gratton, Gabriele and Shen, Caixia, Intimidation: Linking Negotiation and Conflict (November 2019). International Economic Review, Vol. 60, Issue 4, pp. 1589-1618, 2019, Available at SSRN: https://ssrn.com/abstract=3602093 or http://dx.doi.org/10.1111/iere.12398

Sambuddha Ghosh (Contact Author)

Boston University - Department of Economics ( email )

270 Bay State Road
Boston, MA 02215
United States

Gabriele Gratton

UNSW Australia Business School, School of Economics ( email )

High Street
Sydney, NSW 2052
Australia

Caixia Shen

Shanghai University of Finance and Economics ( email )

777 Guoding Road
Shanghai, AK Shanghai 200433
China

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