American Economic Review: Insights
ISSN 2640-205X (Print) | ISSN 2640-2068 (Online)
Long Wars
American Economic Review: Insights
(pp. 145–59)
Abstract
We study whether the Coase conjecture holds for bargaining during war. Two players, A and B, contest a divisible resource until one side collapses or agreement is reached. If player B is militarily strong, then he insists on getting a large share. However, player A only concedes this large share if player B credibly signals his strength by fighting a sufficiently long war. Thus, the Coase conjecture fails, and asymmetric information about military strength explains why long wars may be inevitable. Using a mechanism design approach, we derive a lower bound on the expected duration of war.Citation
Baliga, Sandeep, and Tomas Sjöström. 2026. "Long Wars." American Economic Review: Insights 8 (2): 145–59. DOI: 10.1257/aeri.20240624Additional Materials
JEL Classification
- C78 Bargaining Theory; Matching Theory
- D74 Conflict; Conflict Resolution; Alliances; Revolutions
- D82 Asymmetric and Private Information; Mechanism Design
- F51 International Conflicts; Negotiations; Sanctions