Skip to main content Accessibility help

The Inefficient Use of Power: Costly Conflict with Complete Information


Recent work across a wide range of issues in political economy as well as in American, comparative, and international politics tries to explain the inefficient use of power—revolutions, civil wars, high levels of public debt, international conflict, and costly policy insulation—in terms of commitment problems. This paper shows that a common mechanism is at work in a number of these diverse studies. This common mechanism provides a more general formulation of a type of commitment problem that can arise in many different substantive settings. The present analysis then formalizes this mechanism as an “inefficiency condition” that ensures that all of the equilibria of a stochastic game are inefficient. This condition has a natural substantive interpretation: Large, rapid changes in the actors' relative power (measured in terms of their minmax payoffs) may cause inefficiency.

Corresponding author
Robson Professor, Department of Political Science, 210 Barrows Hall, 1950, University of California, Berkeley, CA 94720-1950 (
Hide All
Acemoglu Daron, and James A. Robinson. 2000. “Why Did the West Extend the Franchise.Quarterly Journal of Economics 115 (November): 116799.
Acemoglu Daron, and James Robinson. 2001. “A Theory of Political Transitions.American Economic Review 91 (September): 93863.
Alesina Alberto, and Guido Tabellini. 1990. “A Positive Theory of Fiscal Deficits and Government Debt.Review of Economic Studies 57 (July): 40314.
Anderlini Luca, and Leonardo Felli. 2001. “Costly Bargaining and Renogiation,” Econometrica 69 (March): 377411.
Ausubel Lawrence, Peter Cramton, and Raymond Deneckere. 2002. “Bargaining in Incomplete Information.” In Handbook of Game Theory, ed. Robert J. Aumann and Sergiu Hart. Amsterdam: Elsevier Science B.V., Vol. 3.
Besley Timothy, and Stephen Coate. 1998. “Sources of Inefficiency in a Representative Democracy.American Economic Review 88 (March): 13956.
Busch Lutz-Alexander, and Quan Wen. 1995. “Perfect Equilibria in a Negotiation Model.Econometrica 63 (May): 54565.
de Figueiredo Rui. 2003. “Endogenous Budget Insitutions and Political Insulation: Why States Adopt the Item Veto.Journal of Public Economics. 87 (December): 196783.
de Figueiredo Rui. 2002. “Electoral Competition, Political Uncertainty, and Policy Insulation.American Political Science Review 96 (June): 32135.
de Figueiredo Rui, and Richard Vanden Bergh. 2001. “Protecting the Weak: Why (and When) States Adopt an Administrative Procedure Act.” Manuscript. Haas School of Business, U.C. Berkeley.
Fearon James D. 1995. “Rationalist Explanations for War.International Organization 39 (Summer): 379414.
Fearon James D. 1998. “Commitment Problems and the Spread of Ethnic Conflict.” In The International Spread of Ethnic Conflict, ed. David A. Lake and Donald Rothchild. Princeton, NJ: Princeton University Press.
Fearon James. 2003. “Why Do Some Civil Wars Last So Long?Journal of Peace Research (forthcoming). Stanford.
Fearon James D., and David Laitin. 2003. “Ethnicity, Insurgency, and Civil War.American Political Science Review 97 (February): 7590.
Fernandez Raquel, and Jacob Glazer. 1991. “Striking for a Bargain Between Two Completely Informed Agents.American Economic Review 81 (March): 24052.
Friedman James. 1986. Game Theory with Applications to Economics. New York: Oxford.
Fudenberg Drew, and Eric Maskin. 1986. “The Folk Theorem in Repeated Games with Discounting and Incomplete Information.Econometrica 54 (May): 53356.
Merlo Antonio, and Charles Wilson. 1995. “A Stochastic Model of Sequential Bargaining with Complete Information.Econometrica 63 (March): 37199.
Moe Terry. 1990. “The Politics of Structural Choice: Towards a Theory of Public Bureaucracy.” In Organization Theory from Chester Barnard to the Present and Beyond, ed., Oliver E. Williamson. Berkeley: University of California Press.
Muthoo Abhinay. 1999. Bargaining Theory with Applications. New York: Cambridge University Press.
Persson Thorsten, and Lars Svensson. 1989. “Why a Stubborn Conservative Would Run a Deficit: Policy with Time-Inconsistent Preferences.Quarterly Journal of Economics 104 (May): 32545.
Powell Robert. 1999. In the Shadow of Power. Princeton, NJ: Princeton University Press.
Powell Robert. 2002. ”Bargaining Theory and International Conflict.” Annual Review of Political Science, Vol. 5. Palo Alto, CA: Annual Reviews.
Recommend this journal

Email your librarian or administrator to recommend adding this journal to your organisation's collection.

American Political Science Review
  • ISSN: 0003-0554
  • EISSN: 1537-5943
  • URL: /core/journals/american-political-science-review
Please enter your name
Please enter a valid email address
Who would you like to send this to? *


Altmetric attention score

Full text views

Total number of HTML views: 0
Total number of PDF views: 0 *
Loading metrics...

Abstract views

Total abstract views: 0 *
Loading metrics...

* Views captured on Cambridge Core between <date>. This data will be updated every 24 hours.

Usage data cannot currently be displayed