Conflict and negotiation: a game theoretical approach

We study economic conflicts using a game theoretical approach. We model a conflict between twoagents where each one has two possible strategies: cease-fire or neglect the truce. Under thissetting, we use the concept of pre-donations, namely, a redefinition of the game where agentscommit to transfer a share of their output to the other agent (Sertel, 1992), and explain under whichconditions a system of pre-donations can facilitate a truce. We find that for conflicts involving highcosts there is a distributive mechanism, acceptable for both parties, such that, the best strategy forboth parties is Cease-Fire. However, in many cases there are no sufficient conditions for the schemeor pre-donations to be effective. We also analyze some limitations of this framework and extend themodel in order to deal with some of these flaws. Finally, in order to illustrate the relevance of thetheoretical results we briefly describe some of the circumstances that characterized the negotiationprocesses between the Colombian government and different illegal groups.