American Economic Review: Vol. 104 No. 4 (April 2014)


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Cycles of Conflict: An Economic Model

Article Citation

Acemoglu, Daron, and Alexander Wolitzky. 2014. "Cycles of Conflict: An Economic Model." American Economic Review, 104(4): 1350-67.

DOI: 10.1257/aer.104.4.1350


We propose a model of cycles of conflict and distrust. Overlapping generations of agents from two groups sequentially play coordination games under incomplete information about whether the other side consists of bad types who always take bad actions. Good actions may be misperceived as bad and information about past actions is limited. Conflict spirals start as a result of misperceptions but also contain the seeds of their own dissolution: Bayesian agents eventually conclude that the spiral likely started by mistake, and is thus uninformative of the opposing group's type. The agents then experiment with a good action, restarting the cycle.

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Acemoglu, Daron (MIT)
Wolitzky, Alexander (Stanford U)

JEL Classifications

D72: Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
D74: Conflict; Conflict Resolution; Alliances
D83: Search; Learning; Information and Knowledge; Communication; Belief
Z13: Economic Sociology; Economic Anthropology; Social and Economic Stratification

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