this desire conflicts with other strong motivationsa typical reaction is to trade off fairness against these other concerns …. Inequ(al)ity aversion allows capturing such trade off considerations in various ways(Bolton, 1991, Bolton and Ockenfels …, 1998 and 2000, Fehr and Schmidt, 1999,are examples).Such trade off analysis measures how far one deviates from fairness …

We construct a dynamic theory of civil conflict hinging on inter-ethnic trust and trade. The model economy is … beliefs on the average propensity to trade of the other group. Since confict disrupts trade, the onset of a conflict signals … inhabitated by two ethnic groups. Inter-ethnic trade requires imperfectly observed bilateral investments and one group has to form …