Conflict as a Part of the Bargaining Process

Abstract

This paper investigates the use of conflict as a bargaining instrument. It first revises the arguments explaining the role of confrontation as a source of information and its use during negotiations. Then it offers evidence illustrating this phenomenon by analyzing a sample of colonial and imperial wars. The second part of the paper explores a bargaining model with one-sided incomplete information. Parties can choose the scope of the confrontation they may want to engage in: An absolute conflict that terminates the game or a limited conflict that only introduces delay and conveys information about the eventual outcome of the absolute one. It is shown that confrontation has a double-edged effect: It may paradoxically open the door to agreement when the uninformed party is so optimistic that no agreement is feasible. But it can also create inefficiency when agreement is possible but the informed agent has an incentive to improve her bargaining position by fighting.