Institutional design and conflict: an introduction

Abstract

Among the prevalent objectives that we should set for our society, reduction of conflicts of all kinds is probably one of the easiest to agree upon. Any social contract that establishes peaceful ways to resolve disputes can Pareto-dominate, for some appropriate transfers or side payments, any social contract that instead lets individuals or groups resolve disputes through costly conflict. Given that the international order is a highly incomplete social contract and given that no authority has enforcement power over sovereign States, renegotiation is unavoidable when considering the international order. Moreover, such negotiations are more likely to become conflictual when the relevant players lack commitment power needed for side payments and/or lack precise information about the strength of the opponents. Since all these critical elements for peaceful negotiations to succeed, namely enforcement power, commitment power, and completeness of information, are most unlikely to exist in the international arena, international relations are the type of relations in which anarchy is most often the reality and conflict is the hardest to avoid. Yet, even in the most pessimistic world of anarchy, the quest for self enforcing institutions that may help conflict resolution or the reduction of negotiation and renegotiation costs is an important one, and a lot more work can be done by economists and political scientists to identify self-enforcing institutional mechanisms that work better than others and that therefore the relevant players could coordinate on. This issue contains some important contributions in this direction, and it can be viewed as divided in two parts: The first three papers deal with the difficult issues of alliance formation and alliance behavior in negotiations and contests, which is an important