. Iterative admissibility also provides predictions for every finite level of reasoning about rationality. Overall we observe …

This paper develops a dynamic theory of war and peace. In our framework, an aggressive country can forcibly extract … concessions from a non-aggressive country via war. Alternatively, it can avoid war and allow the non-aggressive country to make … private shock which deems concessions too costly. We show that the realization of war sustains concessions along the …