A Unique and Robust Social Contract: An Application to Negotiations with Probabilistic Conflicts

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Abstract

This paper considers social contracts (or mechanisms) in negotiations with incomplete information in which an outside option is a probabilistic conflict and a peaceful agreement is ex ante efficient. I compute the set of interim incentive efficient mechanisms, the ex ante incentive efficient mechanism, as well as the neutral bargaining solution. I numerically illustrate that the focus on the ex ante incentive efficient mechanism as the most reasonable prediction is not robust. This paper justifies the neutral bargaining solution as the unique, robust solution among all interim incentive efficient mechanisms.

Original languageEnglish
Pages (from-to)61-74
Number of pages14
JournalGlobal Economic Review
Volume51
Issue number1
DOIs
Publication statusPublished - 2022

Bibliographical note

Publisher Copyright:
© 2021 Institute of East and West Studies, Yonsei University, Seoul.

All Science Journal Classification (ASJC) codes

  • General Economics,Econometrics and Finance
  • Political Science and International Relations
  • Business and International Management

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