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Information and Economic Interdependence

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  • William Reed

    (Department of Political Science Rice University)

Abstract

The pacifying effect of economic interdependence on conflict onset can be better understood in the context of "noisy" bargaining. Specifically, trading states bargain under less noisy conditions and, as a result, are unlikely to engage in militarized conflict. Noise is introduced into a generic take-it-or-leave-it bargaining game in the form of nonspecific asymmetric information about the defender's reservation value. Comparative statics show a positive monotonic relationship between variance in the noise term and the onset of militarized conflict. The relationships among economic interdependence, variance in the noise term, and conflict onset are evaluated with a Bayesian heteroskedastic probit model. Historical data are used to demonstrate that interdependence and uncertainty are related to each other and jointly related to the onset of militarized conflict. Uncertainty appears to be reduced by economic interdependence, and this leads to an enhanced probability of agreement short of a militarized clash.

Suggested Citation

  • William Reed, 2003. "Information and Economic Interdependence," Journal of Conflict Resolution, Peace Science Society (International), vol. 47(1), pages 54-71, February.
    • Handle: RePEc:sae:jocore:v:47:y:2003:i:1:p:54-71
    DOI: 10.1177/0022002702239511
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    References listed on IDEAS

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    Cited by:

    1. Anderton,Charles H. & Carter,John R., 2009. "Principles of Conflict Economics," Cambridge Books, Cambridge University Press, number 9780521875578, December.

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