On the Micro-Foundations of Contract Versus Conflict with Implications for International Peace-Making

26 Pages Posted: 25 Apr 2011

See all articles by José Cuesta

José Cuesta

Inter-American Development Bank (IDB)

Syed Mansoob Murshed

Institute of Social Studies (ISS)

Date Written: August 2008

Abstract

This paper expands the micro-foundations of the traditional greed and grievance non-cooperative model of civil conflict between a government and a rebel group. First, the paper’s model allows for greed and grievance to be orthogonal, so that they may affect each other. Second, the model allows for the reaction curves of both parties in non-cooperative games to be substitutes and not inevitably complementary. Third, the paper allows for Diaspora transfers to rebel groups. Fourth, the paper expands external aid in the form of fungible financing of government transfers “buying” peace. These extensions provide a better understanding of conflict persistence, the consequences of competing international aid and why sub-optimal sanctions provision (“cheap talk”) by the international community are frequent.

Suggested Citation

Cuesta, José and Murshed, Syed Mansoob, On the Micro-Foundations of Contract Versus Conflict with Implications for International Peace-Making (August 2008). IDB Working Paper No. 544, Available at SSRN: https://ssrn.com/abstract=1820932 or http://dx.doi.org/10.2139/ssrn.1820932

José Cuesta (Contact Author)

Inter-American Development Bank (IDB) ( email )

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Syed Mansoob Murshed

Institute of Social Studies (ISS) ( email )

PO Box 29776
2502 LT The Hague, 2518 AX
Netherlands
+31 70 426 0591 (Phone)
+31 70 426 0799 (Fax)

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