Rohner, Dominic; Thoenig, Mathias; Zilibotti, Fabrizio - Oxford Centre for the Analysis of Resource-Rich … - 2011
We construct a dynamic theory of civil conict hinging on inter-ethnic trust and trade. The model economy is inhabitated by two ethnic groups. Inter-ethnic trade requires imperfectly observed bilateral investments and one group has to form beliefs on the average propensity to trade of the other...