serval:BIB_4DD3DF262B7C
War Signals: A Theory of Trade, Trust and Conflict
10.1093/restud/rdt003
000322409100011
http://restud.oxfordjournals.org/
Rohner
D.
author
Thoenig
M.
author
Zilibotti
F.
author
article
2013-07
Review of Economic Studies
0034-6527
journal
80
3
1114-1147
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.
Beliefs
Civil war
Conflict
Cultural transmission
Ethnic fractionalization
Peacekeeping
Strategic complementarity
Trade
eng
60_published
true
peer-reviewed
University of Lausanne
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