Lect 11 - Commitment Problems : Conflict

investment

looks towards the future

if no authority..

individuals/groups can be tempted to rob

how to solve investment problem?

centralized authority : establishes rules and enforces them (arresting, etc)

if you invest..

centralized authroity will ensure that you can

How can coercisan be good sometimes?

can stablize revune wlel enough, uses power to create a system that you can steal from

stationary bandit

a richer population = more taxes for the ruler

bandit invests a little…

gets a larger income stream

what committment problem is created by autocrat?

citizens worry about being overtaxed

what happens if autocrat doesn’t have checks?

there is no reason for the ruler to not steal, the ruler has all of the power.

how may citizens behave in committment problem if there are no checks?

they may work less rather than invest or innovate because they cannot trust autocrats

Expected payoff

how rational actors think about risky choices

Coin flip :

why are you tempted to cheat on your taxes?

it may seem rational to take the risk because multiplying the outcome of each action and see that cheating has a higher payoff

If war is costly,

the total expected payoff must be less than the total value of the thing they’re fighting over

Why do wars happen? Bargaining problem

Commitment problems : rational states should not fight, but both sides cannot trust that the other will not violate the treaty

If there is a deal 50/50 but side B disarms, why would B not trust it?

There is no way to keep A’s promise to not exploit future weakness because their incentives might change

What happens if one side gains power and there’s no third-party to enfort?

A commitment problem arises because the other side with more power will have incentive to increase their leverage

Counter intuitive implication of war :

FIghting is initated by side that loses relative strength. Want to fight now before position weakens

How is the Iraq war a commitment problem?

If Iraq had WMD, they wanted to avoid future conflicts by going in while they have strength. Iraq cannot say that they won’t pursue WMD, USA chose preventive war to have better bargaining power

Why Ukraine?

If Ukraine goes to NATO, Russia could lose power over Ukraine. Putin may have decided acting now militarily is better than a power shift happening\

Why do civil wars need to be solved by outside powers?

Solutions on paper, but there is deep mistrust. They do not know how each side can trust the other. Neither side can commit to the other end of the bargain unless disarment happens. But, if they disarm, side A could just invade side B tomorrow.

Individual rational choices cause social dilemmas

Yes

What is the way out for these wars?

Having an organization with clout enforcing it, the commitment suddenly becomes believable. Cheating has a guaranteed cost

Why did Sierra Leon destroy railways?

Feared that opposition areas economically would mean greater political power for his future opponents down the road. Chose to sabotage economy now

How does destroying good protect oneself in the future?

Opposition cannot commit from using future power against him, so he destroyed any ability to do so

Why will dictators stay in power for so long becaue of committment powers?

it is the fear that the future government will be retaliatory if he steps down

Given how rational feelings about explotation can lead to terrible outcomes, what kind of institutions do we need to build trust for peace?

This is something to think about