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Mediation and Peace

Author

Listed:
  • Johannes Hörner
  • Massimo Morelli
  • Francesco Squintani

Abstract

This article applies mechanism design to the study of international conflict resolution. Standard mechanisms in which an arbitrator can enforce her decisions are usually not feasible because disputants are sovereign entities. Nevertheless, we find that this limitation is inconsequential. Despite only being capable of making unenforceable recommendations, mediators can be equally effective as arbitrators. By using recommendation strategies that do not reveal that one player is weak to a strong opponent, a mediator can effectively circumvent the unenforceability constraint. This is because these strategies make the strong player agree to recommendations that yield the same payoff as arbitration in expectation. This result relies on the capability of mediators to collect confidential information from the disputants, before making their recommendations. Simple protocols of unmediated communication cannot achieve the same level of ex ante welfare, as they preclude confidentiality.

Suggested Citation

  • Johannes Hörner & Massimo Morelli & Francesco Squintani, 2015. "Mediation and Peace," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 82(4), pages 1483-1501.
    • Handle: RePEc:oup:restud:v:82:y:2015:i:4:p:1483-1501.
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    File URL: http://hdl.handle.net/10.1093/restud/rdv022
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    References listed on IDEAS

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    5. Goltsman, Maria & Hörner, Johannes & Pavlov, Gregory & Squintani, Francesco, 2009. "Mediation, arbitration and negotiation," Journal of Economic Theory, Elsevier, vol. 144(4), pages 1397-1420, July.
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    More about this item

    Keywords

    mediation; arbitration; cheap talk; mechanism design; conflict;
    All these keywords.

    JEL classification:

    • C7 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory

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