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Bargaining and Rationalist Explanations for War
Unformatted Document Text:  25 where the irresolute state (1) moves first, the SPE suggests that the resolute state (2) can get as much as . If is small, it means state 2 can get most of the pie. In condition II where the resolute state (1) moves first, he can get all of the pie. In summary, the SPEs lead to two propositions of crisis bargaining in the absence of a general war. First, resolute state always wins. It can always get most even all of the disputed benefits. Therefore, being resolute, or having a lower bargaining cost, is an advantage in crisis bargaining. I call this advantage “bargaining advantage.” Second, the initiator of international crises also enjoys some bonus, which I term “first-move advantage” in crisis bargaining. The effect of first-move advantage is manifest when a comparison is made between the benefits of state 1 and state 2 under the two conditions. When state 2 has a bargaining advantage, state 1 can obtain —the bargaining cost of state 2—in equilibrium by virtue of his first-move advantage. Under condition II when state 1 enjoys both first-move and bargaining advantages, state 2 is left nothing. The comparison also indicates that bargaining advantage dominates first-move advantage. An irresolute state who decides to move first can offset a small portion of her bargaining disadvantage. As far as the delay in solution is concerned, in Table 1 the outcome in both situations is , suggesting an agreement is reached immediately. In other words, when the shadow of general war is incredible, crisis bargaining is the same as pure bargaining and Rubinstein’s conclusion applies. In this case, an instant agreement is the most efficient way to resolve the dispute with complete information and there will be no bargaining at all. Bargaining when one state expects positive utility in a general war The second possible situation is that only one state expects positive utility in general war due to her military advantage, that is, either when state 1 enjoys military advantage, or otherwise . Note that military advantage here is defined as

Authors: Ye, Min.
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where the irresolute state (1) moves first, the SPE suggests that the resolute state (2) can get as
much as
. If is small, it means state 2 can get most of the pie. In condition II where the
resolute state (1) moves first, he can get all of the pie. In summary, the SPEs lead to two
propositions of crisis bargaining in the absence of a general war. First, resolute state always
wins. It can always get most even all of the disputed benefits. Therefore, being resolute, or
having a lower bargaining cost, is an advantage in crisis bargaining. I call this advantage
“bargaining advantage.” Second, the initiator of international crises also enjoys some bonus,
which I term “first-move advantage” in crisis bargaining. The effect of first-move advantage is
manifest when a comparison is made between the benefits of state 1 and state 2 under the two
conditions. When state 2 has a bargaining advantage, state 1 can obtain —the bargaining cost
of state 2—in equilibrium by virtue of his first-move advantage. Under condition II when state 1
enjoys both first-move and bargaining advantages, state 2 is left nothing. The comparison also
indicates that bargaining advantage dominates first-move advantage. An irresolute state who
decides to move first can offset a small portion of her bargaining disadvantage.
As far as the delay in solution is concerned, in Table 1 the outcome in both situations is
, suggesting an agreement
is reached immediately. In other words, when the shadow of
general war is incredible, crisis bargaining is the same as pure bargaining and Rubinstein’s
conclusion applies. In this case, an instant agreement is the most efficient way to resolve the
dispute with complete information and there will be no bargaining at all.
Bargaining when one state expects positive utility in a general war
The second possible situation is that only one state expects positive utility in general war
due to her military advantage, that is, either
when state 1 enjoys military
advantage, or otherwise
. Note that military advantage here is defined as


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