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Conflict and Governance

Paper Session

Saturday, Jan. 5, 2019 10:15 AM - 12:15 PM

Atlanta Marriott Marquis, L504
Hosted By: American Economic Association
  • Chair: Olga Shemyakina, Georgia Institute of Technology

Divide and Rule: An Origin of Polarization and Conflict

Simon Alder
University of North Carolina-Chapel Hill
Yikai Wang
University of Oslo


We propose a theory of civil conflict where political elites strategically initiate conflicts in order to polarize society and thus sustain their own power. We provide a micro-foundation for this divide-and-rule strategy by modelling polarization as a lack of trust among groups in the population. Trust is shaped by economic interactions between members of different groups who observe trade outcomes and update their belief about the relationship with the other group. High trust in turn increases the expected gains from trade and therefore the common interest of people to trade without being taxed by the elite. This leads to a revolutionary threat to which the elite responds by starting a conflict to interrupt trade and prevent trust from increasing.

Paths of Ideological Conflict: Closing the Gap Between Gamson’s Law and Theory

Julia Belau
Technical University of Dortmund


Gamson’s law suggests that parties in a coalition tend to receive portfolio payoffs proportional to their relative seat share in parliament. Although evidence in favor of Gamson’s law has been found in many empirical studies, its theoretical foundation is poor and even conflicts with standard bargaining theory. Specifically, the use of seat shares does not depict a party’s ability to join alternative government coalitions. Both Gamson’s Law and standard power indices ignore the impact of ideological conflicts within coalitions.This paper provides a power index based on both pivotal ability and ideological conflict analysis. We implicitly use content analysis of party programs to design a political network and measure ideological closeness by conflict paths in this network. An empirical analysis of portfolio allocation after German elections shows that our index confirms Gamson’s law and therefore closes the gap to bargaining theory.

The Impact of Social Media on Belief Formation

Marco Alexander Schwarz
University of Innsbruck


Social media are becoming increasingly important in our society and change the way people communicate, how they acquire information, and how they form beliefs. Experts are concerned that the rise of social media may make interaction and information exchange among like-minded individuals more pronounced and therefore lead to increased disagreement in a society. This paper analyzes a learning model with endogenous network formation in which people have different types and live in different regions. I show that when the importance of social media increases, the amount of disagreement in the society first decreases and then increases. Simultaneously, people of the same type hold increasingly similar beliefs. Furthermore, people who find it hard to communicate with people in the same region may interact with similar people online and consequently hold extreme beliefs. Finally, I propose a simple way to model people who neglect a potential correlation of signals and show that these people may be made worse off by social media.

The Interaction of Communities, Religion, Governments, and Corruption in the Enforcement of Contracts and Social Norms

Matthew O. Jackson
Stanford University
Yiqing Xing
Johns Hopkins University


Are informal communities and formal government policing substitutes or complements in enforcing norms of reciprocation and exchange? How do religion and corruption affect that interaction? We introduce a model in which people exchange informally within their community as well as externally on a market in which transactions are policed. We show that informal community enforcement and formal policing are complements: the news that someone was caught by the police can lead to community ostracism, bolstering incentives. Although community transactions offer less direct benefits, their presence lowers overall costs of enforcement and it may be welfare-maximizing for a society to rely on both community and formal exchange. We explain why the optimal mix of community and formal markets is discontinuous in underlying parameters. We also show that religion can enhance the complementarity between community and formal policing, while corruption undermines it.
JEL Classifications
  • D7 - Analysis of Collective Decision-Making