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Finds that asymmetric information on military strength leads to inevitable long wars between parties.
We study whether the Coase conjecture holds for bargaining during war. Two players, A and B, contest a divisible resource until one side collapses or agreement is reached. If player B is militarily strong, then he insists on getting a large share. However, player A only concedes this large share if player B credibly signals his strength by fighting a sufficiently long war. Thus, the Coase conjecture fails, and asymmetric information about military strength explains why long wars may be inevitable. Using a mechanism design approach, we derive a lower bound on the expected duration of war. (JEL C78, D74, D82, F51)
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Baliga et al. (2026) studied this question.
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