Deterrence in Contests

Abstract

This paper explores the role of deterrence in contests. As a general rule, we show that for a deterrence strategy to be played by rational agents, it is necessary that the contest be destructive. We show for a very general class of functions that pure strategy deterrence equilibria where contestants deter one another do not exist. A corollary of this finding is that under fairly general conditions, agents should always be expected to engage in contests. Applied to international relations, our results imply that war is always a potential outcome despite deterrence attempts.

“Oil above Water”

“…We model the military dimension of third-party intervention by adopting the approach introduced by Grossman and Kim (1995) and more recently applied by Dunne et al (2006), whereby military intervention might deter civil war. 4 To avoid the intricacies inherent to conflict games with simultaneous timing (see De Luca and Sekeris 2013), we assume that the target player and the intervener decide their armament levels prior to the potential aggressor taking an action, thus implying that the latter may be disincentivized from prolonging the civil war. 5 The incentives for third-party interventions are intimately linked to the oil market and its structure in our model.…”

“…4 To avoid the intricacies inherent to conflict games with simultaneous timing (see De Luca & Sekeris, 2013), we assume that the target player and the intervener decide their armament levels prior to the potential aggressor taking an action, thus implying that the latter may be disincentivized from prolonging the civil war. 5 The incentives for third party interventions are 4 This has clear similarities to extended deterrence theory in international relations where a defender extends support to defend a third party from an aggression (see Huth (1988) for a more thorough description), hoping to eventually secure a peaceful situation.…”

Self-Containment

“…For instance, the deterrence strategy identified in Jackson and Morelli (2009), Jacobsson (2009), and De Luca and Sekeris (2013) is dominated because there is no destruction in our model.…”

“… 2. In negative-sum games, peaceful outcomes may emerge at equilibrium (Grossman and Kim 1995; Jacobsson 2009; De Luca and Sekeris 2013). In this article, we unveil the self-containment mechanism in a zero-sum game environment that otherwise produces war equilibria.…”

Beyond Deterrence and Decline Towards a General Understanding of Peace Economics

“…See among othersGrossman and Kim (1995),Neary (1997),Anderton et al (1999),Dixit (2004),Baker (2003),Munster (2007). See in particular DeLuca and Sekeris (2013), that analyzes deterrence enriching a Hirshleifer-style model of continuing conflict.…”