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Bester, Helmut and Wärneryd, Karl (February 2006): Conflict and the Social Contract. SFB/TR 15 Discussion Paper No. 94
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Abstract

We consider social contracts for resolving conflicts between two agents who are uncertain about each other's fighting potential. Applications include international conflict, litigation, and elections. Even though only a peaceful agreement avoids a loss of resources, if this loss is small enough, then any contract must assign a positive probability of conflict. We show how the likelihood of conflict outbreak depends on the distribution of power between the agents and their information about each other.