Bargaining in the Shadow of War: When Is a Peaceful Resolution Most Likely?

Authors


  • I thank seminar participants at Stanford and UCSD, the anonymous referees, and Bruce Bueno de Mesquita for very helpful comments.

Donald Wittman is Professor of Economics, University of California, Santa Cruz, CA 95064 (wittman@ucsc.edu).

Abstract

This article derives the optimal bargaining strategies of the belligerents when each side has private but incomplete information about the expected outcome of a war, should it take place. I show that the aggressor's demand curve can be below the defender's offer curve, that wars are possible even when both sides are jointly pessimistic, and that the relative cost of a war can radically alter the types of disputes that end in war. A simple diagram provides the intuition for most of the major propositions.

Ancillary