The Role of Power Imbalance for the Emergence of Conflict

The reasons for the emergence of resource-wasteful conflict is often considered a puzzle: While peaceful settlement of distributional conflict usually yields a large peace dividend, disagreement can have devastating consequences. Researchers from different social science disciplines look into the question of why, nevertheless, mutual agreement on how to divide the peace dividend is not an automatism. A prominent aspect in the discussion on the determinants of resource-wasteful conflict is the role of the balance of power: Does war become more likely if the parties involved are rather equal or unequal in terms of their fighting strengths? Florian Morath, Professor of Economic Policy at Goethe University Frankfurt, addresses this question together with Luisa Herbst and Kai Konrad (both Max Planck Institute for Tax and Public Finance, Munich) in a recent publication* based on an experimental setting.

The experiment considers two alternative arrangements of bargaining in the shadow of conflict. In one arrangement the players are exogenously offered a division of the resources which they can either accept or reject; conflict occurs if the players do not accept this peaceful solution. This exogenous mediation proposal conforms with the rules of cooperative Nash bargaining and thus accounts for the power imbalance. The alternative arrangement is a Nash demand game, in which the two players simultaneously choose how much of the resources each of them demands; conflict occurs if the endogenous demands are incompatible. For both types of negotiations, bargaining failure leads to a resource-wasteful conflict which yields an outcome that is Pareto inferior to what the players can achieve through peaceful agreement. A key feature of the experimental design is the variation of the players’ relative fighting strengths in the contest, which are known when bargaining. Further control treatments vary the exogenous mediation proposal and address the issue of coordination failure in the Nash demand game.

The experiment reveals a significant probability of resource-wasteful conflict in all treatments. In case of an exogenous mediation proposal, increases in the power imbalance do not have a significant impact on the likelihood of conflict. Here, conflict is more often triggered by the player who is disadvantaged in the conflict. In case of endogenous demands, however, the likelihood of conflict significantly increases with a larger imbalance of power. Here, if a peaceful agreement is reached, the player with the low fighting ability often receives almost the entire surplus from peaceful division. Overall, if fighting power is balanced, exogenous mediation proposals can lead to more conflict than endogenous demands. If, however, the power imbalance is large and coordination problems and strategic uncertainty become important, mediation helps to avoid conflict more effectively.

*Herbst, L., Konrad, K. A., Morath, F. (2016), "Balance of Power and the Propensity of Conflict", forthcoming in Games and Economic Behavior.

Top