Caruso, Raul (2007): Recirpcity in the shadow of Threat.
Download (227Kb) | Preview
This paper considers a partial equilibrium model of conflict where two asymmetric, rational and risk-neutral opponents evaluate differently a contested stake. Differently from common contest models, agents have the option of choosing a second instrument to affect the outcome of the conflict. The second instrument is assumed to capture positive investments in ‘conflict management’ - labelled as ‘talks’. It will be demonstrated that the asymmetry in the evaluation of the stake does constitute a powerful force influencing agents’ behaviour. In particular, (a) whenever the asymmetry in the evaluation of the stake is extremely large there is no room for cooperation and a conflict trap emerges; (b) whenever the degree of asymmetry falls within a critical interval cooperation seems to emerge even if only the agent with the higher evaluation of the stake makes a concession, proportional to the optimal choice of ‘talks’; (c) as the evaluations of the stake converge only reciprocal concessions (capturing a kind of strong reciprocity) made by both agents can pave the way for cooperation. In such a case, the existence of reciprocal concessions paves the way for establishing a potential settlement region (PSR) given that both parties can be better off while expending resources in ‘talks’. Finally, throughout the paper, the concept of entropy is applied as a tool for the measurement and evaluation of conflict and conflict management.
|Item Type:||MPRA Paper|
|Institution:||Istituto di POlitica economica, Università Cattolica di Milano|
|Original Title:||Recirpcity in the shadow of Threat|
|Keywords:||Conflict; Contest; Conflict management; conflict resolution; concessions; reciprocity; asymmetry in evaluation; Statistical entropy; cooperation; integrative systems; ‘guns’ and ‘talks’|
|Subjects:||D - Microeconomics > D8 - Information, Knowledge, and Uncertainty > D82 - Asymmetric and Private Information; Mechanism Design
D - Microeconomics > D7 - Analysis of Collective Decision-Making > D74 - Conflict; Conflict Resolution; Alliances
|Depositing User:||Raul Caruso|
|Date Deposited:||14. Feb 2007|
|Last Modified:||17. Feb 2013 13:06|
Acemoglu D., Robinson J.A., (2006), Economic Origins of Dictatorship and Democracy, Cambridge University Press, New York. Amegashie A.J., (2006), A contest Success Function with a Tractable Noise Parameter, Public Choice, vol. 126, pp.135-144. Attaran M., Zwick M., (1989), An Information Theory Approach to Measuring Industrial Diversification, Journal of Economic Studies, vol. 16, no. 1, pp. 19-30. Aumann R.J., Hart S., (2003), Long Cheap Talk, Econometrica, vol. 71, no.6, pp.1619-1660. Baik K.H., (1998), Difference-form contest success functions and efforts levels in contests, European Journal of Political Economy, vol. 14, pp. 685-701. Baik K.H., Shogran J.F., (1995), Contests with Spying, European Journal of Political Economy, vol. 11, pp. 441-451. Basu K., (2006), Coercion, Contract and the Limits of the Market, Social Choice and Welfare (forthcoming). Baumol W.J., (1990), Entrepreneurship: Productive, Unproductive, and Destructive, The Journal of Political Economy, vol. 98, pp. 893-921. Bhagwati J.N., (1982), Directly Unproductive, Profit-Seeking (DUP) Activities, The Journal of Political Economy, vol. 9. no. 5, pp. 988- 1002. 27 Boulding K. E., (1963), Towards a Pure Theory of Threat Systems, The American Economic Review, Papers and Proceedings, vol. 53, no. 2, pp. 424-434. Boulding K. E., Pfaff M., Horvath J., (1972), Grants Economics: A simple Introduction, The American Economist, vol. 16, no.1, pp.19-28. Boulding K. E., (1973), The Economy of Love and Fear, Wadsworth Publishing Company, Belmont. Campiglio L., (1999), Mercato, Prezzi e Politica Economica, Il Mulino, Bologna. Caruso R., (2007), Conflict and Conflict Management with Asymmetric Stakes, (The Good-Cop and the Bad- Cop part II), paper presented at the AEA/ASSA conference 5-7, January 2007, Chicago. Caruso R., (2006a), Conflict and Conflict Management with Interdependent Instruments and Asymmetric Stakes, (The Good Cop and the Bad Cop Game), Peace Economics, Peace Science and Public Policy, vol. 12, no.1, art.1. Caruso R., (2006b), A Trade Institution as a Peaceful Institution? A Contribution to Integrative Theory, Conflict Management and Peace Science, vol. 23, no.1, pp. 53-72. Caruso R., (2005a), A Model of Conflict with Institutional Constraint in a two-period Setting, What is a Credible Grant?, Quaderni dell’Istituto di Politica Economica, n. 46/2005, Università Cattolica del Sacro Cuore, Milano. Caruso R., (2005b), Asimmetrie negli Incentivi, Equilibrio Competitivo e Impegno Agonistico: distorsioni in presenza di doping e combine, Rivista di Diritto ed Economia dello Sport, vol. 1, n. 3, pp. 13-38. Clark D.J., Riis C. (1998),Contest Success Functions: an extension, Economic Theory, vol. 11, pp. 201-204. Dixit A., (2004), Lawlessness and Economics, Alternative Modes of Governance, Princeton, Princeton University Press. Dixit A., (1987), Strategic Behavior in Contests, The American Economic Review, vol. 77, no.5, pp. 891-898. Epstein G. S., Hefeker, C., (2003), Lobbying Contests with alternative Instruments, Economics of Governance, vol. 4, pp. 81-89. Fehr E., Gachter S., (2000), Fairness and Retaliation: The Economics of Reciprocity, The Journal of Economic Perspectives, vol. 14, no.3, pp. 159-181. Fiorentini G., Peltzman S., (1995), The Economics of Organised Crime, Cambridge University Press, Cambridge. Gabor A., Gabor D., (1958), L’entropie comme Mesure de la Liberté Sociale et Économique, Cahiers de L’Institut de Science Économique Appliquée, no.72, pp. 13-25. Garfinkel M. R., Skaperdas S., (2000), Conflict without Misperceptions or Incomplete Information: How the Future Matters, The Journal of Conflict Resolution, vol. 44, no. 6, pp. 793-807. 28 Garfinkel M. R., Skaperdas S., (2006), Economics of Conflict: An Overiew, in Sandler T., Hartley K. (eds.), Handbook of Defense Economics, (forthcoming). Genicot G., Skaperdas S., (2002), Investing in Conflict Management, Journal of Conflict Resolution, vo. 46, no.1, pp. 154-170. Gintis H., (2000), Game Theory Evolving, Princeton University Press, Princeton. Grossman H.I., (1991), A General Equilibrium Model of Insurrections, The American Economic Review, vol. 81, no.4, pp. 912-921. Grossman H. I., (1998), Producers and Predators, Pacific Economic Review, vol. 3, no. 3, pp.169-187. Grossman H. I., Kim M., (1995), Swords or Plowshares? A Theory of the Security of Claims to Property, The Journal of Political Economy, vol. 103, no. 6, pp. 1275-1288. Hardin G. (1968), The Tragedy of Commons, Science, vol. 162, pp. 1243- 1248. Harsanyi J.C., (1965), Bargaining and Conflict Situations in the Light of a new approach to Game Theory, The American Economic Review, vol. 55, no. 1/2, pp.447-457. Hausken K., (2005), Production and Conflict Models Versus Rent-Seeking Models, Public Choice, vol. 123, pp.59-93. Hillman A.L., Riley J.G., (1989), Politically Contestable Rents and Transfers, Economics and Politics, vol. 1, no.1, pp.17-39. Hirshleifer J., (1987a), Economic Behaviour in Adversity, Brighton, Wheatsheaf Books Ltd. Hirshleifer J., (1987b), Comments on Gordon Tullock’s The Economics of Conflict, University of California, UCLA Dept. of Economics, working paper #454. Hirshleifer J. (1988), The Analytics of Continuing Conflict, Synthese, vol. 76, no. 2, pp. 201-233. reprinted by Center for International and Strategic Affairs, CISA, University of California. Hirshleifer J., (1989), Conflict and Rent-Seeking Success Functions, Ratio vs. Difference Models of Relative Success, Public Choice, no. 63, pp.101-112. Hirshleifer J., (1991), The Paradox of Power, Economics and Politics, vol. 3, pp. 177-20. re-printed in Hirshleifer (2001), pp. 43-67. Hirshleifer J., (2001), The Dark Side of the Force, Economic Foundations of Conflict Theory, Cambridge University Press. Horowitz A., Horowitz I., (1968), Entropy, Markov Processes and Competition in the Brewing Industry, Journal of Industrial Economics, vol. 16, pp. 196-211. Isard W., Smith C., (1982), Conflict Analysis and Practical Management Procedures, An introduction to Peace Science, Cambridge, Ballinger Publishing Company. Konrad K., (2000), Sabotage in Rent-Seeking, Journal of Law, Economics and Organization, vol. 16, no.1, pp. 155-165. Konrad K., Skaperdas S., (1998), Extortion, Economica, vol. 65, no. 461- 477. Konrad K., Skaperdas S., (1997), Credible Threats in extortion, Journal of Economic Behavior & Organization, vol. 33, pp.23-39 Mehlum H., Moene K.O., (2002), Battlefields and Marketplaces, Department of Economics, University of Oslo, no. 11/2002. Nash J., (1953), Two-Person Cooperative Games, Econometrica, vol. 21, no.1, pp.128-140. Neary H. M., (1997a), Equilibrium Structure in an Economic Model of Conflict, Economic Inquiry, vol. 35, no. 3, pp.480-494. Neary H.M., (1997b), A comparison of rent-seeking models and economics models of conflict, Public Choice, vol. 93, pp. 373-388. Nti K. O., (1999), Rent-Seeking with asymmetric valuations, Public Choice, vol. 98, pp. 415-430. Nti K.O., (2004), Maximum Efforts in contests with asymmetric valuations, European Journal of Political Economy, vol. 20, pp. 1059-1066. O’Keeffe M., Viscusi K. W., Zeckhauser R. J. (1984), Economic Contests: Comparative Reward Schemes, Journal of Labor Economics, vol.2, no.1, pp.27-56. Pigou A.C., (1921), The Economics of Welfare, MacMillan, London. Third edition (1929). Rosen S., (1986), Prizes and Incentives in Elimination Tournaments, The American Economic Review, vol. 76, no.4, pp. 701-715. Schelling T. C., (1960), The Strategy of Conflict, Harvard University Press, Cambridge. Schelling T. C., (1966), Arms and Influence, Yale University Press, New Haven. Shannon C.E., Weaver W., (1949), The Mathematical Theory of Communication, The University of Illinois Press, Urbana. Skaperdas S., (1992), Cooperation, Conflict, and Power in the Absence of Property Rights, The American Economic Review, vol. 82, no. 4, pp. 720-739. Skaperdas S., (1996), Contest Success Functions, Economic Theory, vol. 7, pp. 283-290. Skaperdas S., Syropoulos C., (1996), Can the Shadow of future harm Cooperation?, Journal of Economic Behavior and Organization, vol. 29, pp. 355-372. Spolaore E., (2004), Economic Integration, International Conflict and Political Unions, Rivista di Politica Economica, vol. IX-X, pp. 3-50. Tullock G., (1980), Efficient Rent Seeking, in Buchanan, J. M., Tollison R., D., Tullock G., (eds.), Toward a Theory of the Rent-seeking Society, Texas A&M University, College Station, pp. 97-112. Usher D., (1987), Theft as a Paradigm for Departures from Efficiency, Oxford Economic Papers, vol. 39, no.2, pp. 235-252. Zamagni S., (ed.), (1993), Mercati Illegali e Mafie, Economia del Crimine Organizzato, Il Mulino, Bologna.
Available Versions of this Item
- Recirpcity in the shadow of Threat. (deposited 14. Feb 2007) [Currently Displayed]