Against Military aggression

War is a sad topic and I really don't want to talk about it. Still, economists might have something relevant to say, too. Some of the economic discussion puts the focus on the economic cost of war. Clearly, this cost is substantial and desasterous. However, economics might also provide some game-theoretic insights. For the benefit of our students, here are some contributions that I find relevant. I do realise that reducing the cruel reality of war to an economic abstraction is a simplification. Still, I hope that the perspective can be useful.

Why does a dictator start a war?

Most wars started by dictators fail. Are dictators just badly informed? The paper by Georgy Egorov and Konstantin Sonin (2023). “Why Did Putin Invade Ukraine? A Theory of Degenerate Autocracy,” presents a game-theoretic argument to explain why dictators towards the end of their reign tend to be less well informed and, therefore, are more likely to engage in doomed activities.

Preference falsification in a suppressive regime might make it harder to assess the degree of support for or the opposition against aggression. Philipp Chapkovski and Max Schaub (2022), “Solid support or secret dissent? A list experiment on preference falsification during the Russian war against Ukraine,” demonstrate that a substantial number of participants in their experiment privately oppose the war while publicly supporting it.

Conflict among imperfectly informed parties.

While Georgy Egorov and Konstantin Sonin (2023) ask why a decision maker is not as well informed as they perhaps should be, a broad literature takes incomplete information among conflicting parties as given. Incomplete information might be a requirement for aggression. Wasting resources on a fight is irrational if all involved parties knew how the fight is going to end. However, parties that are incompletely informed about their strength might at least extract some information from a fight. Here are some starting points:

• John C. Harsanyi and Reinhard Selten (1972). “A Generalized Nash Solution for Two-Person Bargaining Games with Incomplete Information,” studies bargaining of incompletely informed players. Harsanyi and Selten first present a solution concept for a non-cooperative game. This non-cooperative solution is, however, not necessarily unique. Harsanyi and Selten then provide an axiomatic theory that selects a unique outcome. They relate this outcome to the Nash product.
• Rubinstein, Ariel (1985). “A Bargaining Model with Incomplete Information about Time Preferences,” considers a more abstract game. Rubinstein also uses a different equilibrium concept, the sequential equilibrium. He finds a unique solution for the non-cooperative bargaining game.
• While Rubinstein considers one-sided uncertainty, Peter Cramton (1992). “Strategic Delay in Bargaining with Two-Sided Uncertainty,” considers the case where two players are uncertain about their mutual strength.

Resisting aggression?

Wars come with a huge cost. This cost includes tragic cost of lives, people hurt and displaced, property destroyed... Resistance to an aggressor can take different forms, active as well as passive, but resistance is not cheap. Why does the victim of an aggressor not simply give up?

• Part of this issue is an empirical question. Surrendering might cost more lives than resisting. When the German and the Soviet armies invaded Poland on 1 and the 17 September 1939 respectively, the Polish army practically surrendered within only 36 days. These 36 days were tragic for the Polish population, but what followed was no less tragic. About one fifth of the surrendered Polish population lost their lives as a result of war crimes and crimes against humanity.
• Part of this issue is rather a question of economic theory. Here are some starting points:
  • David Hume presents in his Treatise on Human Nature the concept of property as a convention with “infinite advantages” (Sect. II of the Origin of Justice and Property). A convention can be seen as an equilibrium in a coordination game. One equilibrium would be a state where no property exists and each participant of the society can simply take (if they have the power) what they please. A different equilibrium would be a state where property exists and where participants respect the ownership of others. Hume seems to suggest that the equilibrium with property is the one where all participants are better off.
  • R.H. Coase (1960). The Problem of Social Cost. The Journal of Law & and Economics. outlines the relevance of property for economic outcomes.
  • Linked to the concept of property is the concept of relationship-specific investment. Citizens invest labour and goods in their property and in their state, as long as they expect that this property and this state will continue to exist. Once property and state can be appropriated by an aggressor, these investments are no longer rational. Relationship-specific investments are described in Vincent P. Crawford (1990). “Relationship-Specific Investment,”
  • Of course, economists do include in their analysis environments where power and coercion reign. One interesting example is Michele Piccione and Ariel Rubinstein (2007). “Equilibrium in the Jungle.” Here Piccione and Rubinstein analyse the structure of an economic environment which is governed by power and not by contracts.