Mediation and Peace
This paper applies mechanism design to the study of international conflict resolution. Standard mechanisms in which an arbitrator can enforce her decisions are usually not feasible because disputants are sovereign entities. Nevertheless, we find that this limitation is inconsequential. Despite only being capable of making non-binding recommendations, we find that mediators are equally effective as arbitrators. We determine optimal mediation techniques. They consist in not precisely reporting information to conflicting parties, and specifically, in not revealing to a player with probability one that the opponent is weak. These obfuscation techniques strictly improve the chance of peace when the intensity of conflict is high, or when asymmetric information is significant.
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