Paper #: 03-10-056
Why do some civil war settlements prove robust, while others fail? I show how a settlement’s robustness, defined in terms of the risk factor of the mutual-compromise equilibrium, depends on the nature of the stakes of the conflict and the distributional terms of the settlement. I identify the distributional terms of the optimal settlement, namely, that most robust to exogenous shocks to the actors’ confidence that the other will continue to compromise. I introduce a measure of the degree of the perceived indivisibility of the stakes, an increase in which not only decreases the range of feasible distributional settlements, but decreases their robustness as well. I explore how intra-party heterogeneity and uncertainty regarding ex-post outcomes lessen the range and robustness of settlements. In the conclusion, I compile the predictions of the model and briefly consider the policy implications.