Stability of alliance networks

We investigate whether peace can be achieved through the formation of an alliance network, where an alliance designates the possibility of coordinating joint offensive and defensive military action. If players are myopic then no alliance network is peaceful in the absence of trade (see Jackson and Nei (2015)). In contrast, we show that if players anticipate that an initial act of aggression can result in further conflict then peaceful alliance networks can be constructed by dividing the players into two components in such a way that inter-component conflict is avoided through the fear of ensuing intra-component conflict, and intra-component conflict is avoided through the fear of ensuing inter-component conflict.