TY  - RPRT
        AU  - Jiang, Shuguang
AU  - Villeval, Marie Claire
AU  - Zhang, Zhengping
AU  - Zheng, Jie
        TI  - War and Peace: How Economic Prospects Drive Conflictuality
        PY  - 2025/Apr/
        PB  - Institute of Labor Economics (IZA)
        CY  - Bonn
        T2  - IZA Discussion Paper
        IS  - 17823
        UR  - https://www.iza.org/publications/dp17823
        AB  - We experimentally study how economic prospects and power shifts affect the risk of conflict through a dynamic power rivalry game. Players decide whether to maintain the status quo or challenge a rival under declining, constant, or growing economic prospects. We find that conflict rates are highest when economic prospects decline and lowest when they improve. A behavioral model incorporating psychological costs and reciprocity can explain these differences. A survey on U.S.-China relations supports the real-world relevance of these findings. Inspired by the Thucydides’s Trap, this study highlights how economic expectations shape conflict dynamics, offering key insights into geopolitical stability.
        KW  - Thucydides’s Trap
KW  - economic prospects
KW  - conflict
KW  - power shift
KW  - experiment
        ER  -