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Chapter 11: Mechanism Design

Chapter 11: Mechanism Design

pp. 272-296

Authors

, University of Pittsburgh
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Extract

What is generally true about all models of crisis bargaining? Answering a question like this seems daunting because there are infinitely many ways states could negotiate with one another. Fortunately, this chapter introduces a new tool to address the question: mechanism design. We see that types with higher war payoffs will always fight more often than types with lower payoffs, and they will receive better payoffs overall. Meanwhile, it is possible to have negotiations end with guaranteed peace under uncertainty over costs, but no such solution may be possible with uncertainty over power.

Keywords

  • mechanism design
  • direct mechanisms
  • revelation principle
  • monotonicity

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