Most wars are now civil wars. Even though international wars attract enormous global attention, they have become infrequent and brief. Civil wars usually attract less attention, but they have become increasingly common and typically go on for years. This report argues that civil war is now an important issue for development. War retards development, but conversely, development retards war. This double causation gives rise to virtuous and vicious circles. Where development succeeds, countries become progressively safer from violent conflict, making subsequent development easier. Where development fails, countries are at high risk of becoming caught in a conflict trap in which war wrecks the economy and increases the risk of further war. The global incidence of civil war is high because the international community has done little to avert it. Inertia is rooted in two beliefs: that we can safely 'let them fight it out among themselves' and that 'nothing can be done' because civil war is driven by ancestral ethnic and religious hatreds. The purpose of this report is to challenge these beliefs.

Breaking the Conflict Trap: Civil War and Development Policy

Recent theoretical research on principal-agent relationships has emphasized incentive problems that arise when the parties involved are constrained by either asymmetric information or their inability to monitor each other's actions. Here we concentrate on the former constraint and consider the case of a single principal (the monopolist). The main contribution is to show that, under a separability assumption, strong conclusions can be drawn about the nature of optimal incentive schemes. Although the primary focus is on optimal quantity discounts in a monopolized market, the results also shed light on related topics, such as optimal income taxation and commodity bundling.

Monopoly with Incomplete Information

(1975). The Limits of Organization. Journal of Economic Issues: Vol. 9, No. 3, pp. 543-544.

The Limits of Organization

The research for which George Akerlof, Mike Spence, and I are being recognized is part of a larger research program which, today, embraces hundred, perhaps thousands, of researchers around the worl...

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Information and the change in the paradigm in economics

Statistical physics of vaccination

Borrowing on credit cards at high interest rates might appear irrational. However, even low transactions costs can make credit cards attractive relative to bank loans. Credit cards also provide liquidity services by allowing consumers to avoid some of the opportunity costs of holding money. The effect of alternative interest rates on the demand for card debits can explain why credit card interest rates only partially reflect changes in the cost of funds. Credit card interest rates that are inflexible relative to the cost of funds are not inconsistent with a competitive equilibrium that yields zero profits for the marginal entrant.

Consumer Rationality and Credit Cards

Externalities and compulsary vaccinations

This article analyzes the circumstances under which conflict leads to the outbreak of war using a formal model which incorporates both the redistribution of resources as an alternative to war and imperfect information. Countries act as rational agents concerned with both consumption and the public bad of a war. In the first period both countries can either consume or build arms, whereas in the second period there can be either the threat or the use of force to reallocate resources. If both countries are fully informed, then there will be no war but rather a voluntary redistribution of resources. In a situation of asymmetric information, however, in which one country is fully informed and the other is not, a war can occur if the uninformed country uses a separating equilibrium strategy, precommitting itself to a positive probability of war in order to prevent bluffing by the informed country.

Conflict, War, and Redistribution

The relationships between an arms race and the outbreak of war have been debated over many years. Indeed, the question of war outbreak is the most basic and fundamental one in any study of arms races. This question obviously carries much more urgency when it becomes that of whether a nuclear arms race might lead to a nuclear war. That is the focus of the present paper: the relationships between a nuclear arms race and the outbreak of nuclear war in a bipolar world of two nuclear powers. The paper also presents a specific application to the United States-Soviet Union arms race of the post-war period.

https://www.jstor.org/stable/pdfplus/173714.pdf

Can Arms Races Lead to the Outbreak of War

THE ECONOMIC EFFECTS OF ARMAMENTS RACES is a problem that has been neglected by economists. The work that has been done has, with a few exceptions, been done by non-economists or by economists who work at the interface of economics and political science or operations research. Models that treat the economic aspects of the problem have been static, and models that have considered the dynamics of armaments races have ignored the economic aspects. This essay is an attempt to integrate these two lines of research and derive a dynamic economic model of an armament race. In this paper we will show that if each country attempts to allocate resources optimally between consumption and arms, the resulting dynamic equations are similar to Richardson's equations.2 There are several schools of thought about the stability of armament races. One is that armaments races have a stable equilibrium. This result comes either from a static model that treats an armament race as a game similar to "Prisoner's Dilemma" or from dynamics model such as Richardson [8], Saaty [9] and Smoker [10, 11] have presented. The dynamic models have two problems: first, the equations of motion are assumed; second, they assume myopic behavior on the part of the participants. A second belief is that armaments races are unstable. This theory, often seen in the popular press, holds that unless some agreement is reached weapon stocks will increase in an ever increasing spiral that must ultimately lead to bankruptcy or nuclear holocaust. A third view is that a stable equilibrium may exist, but that the stability may only be a local property. Thus a large disturbance of the system (e.g., the introduction of a new weapons system> may cause an armaments race. This view was most recently expressed in Wiesner et al. [12] during the recent ABM debate. One purpose of thispaper is to formulate a model that will permit us either to reconcile or to discriminate between these apparently conflicting viewpoints. We shall address the problem by considering a system with two nations. Each nation can use its production for either consumption or investment in its weapons

Dagobert L. Brito

Papers

Consumer Rationality and Credit Cards

Externalities and compulsary vaccinations

Conflict, War, and Redistribution

Can Arms Races Lead to the Outbreak of War

A Dynamic Model of an Armaments Race