Events

Economics Seminar

Author:

• Selcuk Ozyurt
  Sabanci University

Conflicts and disputes, whether they are related to business or politics, usually end with ex-ante inefficient settlements including war. Crisis bargaining models equipped with informational asymmetries and audience costs are extensively analyzed in economics and political science literature to provide rational explanations for these long-standing wars of nerves. This paper investigates the role of communication – another important dimension of conflicts – and the parameters that are likely to determine the bitterness of rational actors in communicating. Usual informational perturbations, such as negotiators' values for the stake or the settlement, reinforce the impacts of audience costs and lead to an impracticable conclusion that sending milder messages in conflicts are simply communicative mishaps. In this regard, a relevant but disregarded source of uncertainty, that results more plausible and empirically testable hypotheses, is examined.