Mechanism Design Goes to War: Peaceful Outcomes with Interdependent and Correlated Types

TitleMechanism Design Goes to War: Peaceful Outcomes with Interdependent and Correlated Types
Publication TypeJournal Article
Year of Publication2009
AuthorsFey M, Ramsay KW
JournalReview of Economic Design
Volume13
Issue3
Pagination - 250
Date PublishedSeptember 2009
ISBN Number1434-4742, 1434-4742
KeywordsAsymmetric and Private Information, Mechanism Design (D82), Bargaining, Conflict, Conflict Resolution, Alliances, Revolutions (D74), Disputes, Information, International Conflicts, Negotiations, Sanctions (F51), Negotiation, War
AbstractIn this paper, we consider the possibility of identifying peaceful mechanisms such as bargaining protocols, international institutions, or norms that can enable countries to settle disputes in the absence of binding contracts. In particular, we are interested in the existence of mechanisms with zero probability of war. Here, we focus on situations where the countries' payoffs to war are interdependent or correlated and where efficient settlements are not required but subsidies are unavailable. Most importantly, countries can choose to go to war at any time and can use information learned from the negotiation process in making this choice. We characterize the conditions under which no peaceful mechanisms exist and discuss how weakening our war consistency condition can change this result.
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