War Signals: A Theory of Trade, Trust and Conflict

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Serval ID
serval:BIB_4DD3DF262B7C
Type
Article: article from journal or magazin.
Collection
Publications
Institution
Title
War Signals: A Theory of Trade, Trust and Conflict
Journal
Review of Economic Studies
Author(s)
Rohner D., Thoenig M., Zilibotti F.
ISSN
0034-6527
Publication state
Published
Issued date
07/2013
Peer-reviewed
Oui
Volume
80
Number
3
Pages
1114-1147
Language
english
Abstract
We construct a dynamic theory of civil conflict hinging on inter-ethnic trust and trade. The model economy is inhabitated by two ethnic groups. Inter-ethnic trade requires imperfectly observed bilateral investments and one group has to form beliefs on the average propensity to trade of the other group. Since conflict disrupts trade, the onset of a conflict signals that the aggressor has a low propensity to trade. Agents observe the history of conflicts and update their beliefs over time, transmitting them to the next generation. The theory bears a set of testable predictions. First, war is a stochastic process whose frequency depends on the state of endogenous beliefs. Second, the probability of future conflicts increases after each conflict episode. Third, "accidental" conflicts that do not reflect economic fundamentals can lead to a permanent breakdown of trust, plunging a society into a vicious cycle of recurrent conflicts (a war trap). The incidence of conflict can be reduced by policies abating cultural barriers, fostering inter-ethnic trade and human capital, and shifting beliefs. Coercive peace policies such as peacekeeping forces or externally imposed regime changes have instead no persistent effects.
Keywords
Beliefs, Civil war, Conflict, Cultural transmission, Ethnic fractionalization, Peacekeeping, Strategic complementarity, Trade
Web of science
Open Access
Yes
Create date
11/05/2012 22:52
Last modification date
01/10/2019 7:17
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