TY  - RPRT
        AU  - Polachek, Solomon
AU  - Xiang, Jun
        TI  - How Opportunity Costs Decrease the Probability of War in an Incomplete Information Game
        PY  - 2008/Dec/
        PB  - Institute of Labor Economics (IZA)
        CY  - Bonn
        T2  - IZA Discussion Paper
        IS  - 3883
        UR  - https://www.iza.org/publications/dp3883
        AB  - This paper shows that the opportunity costs resulting from economic interdependence decrease the equilibrium probability of war in an incomplete information game. This result is strongly consistent with existing empirical analyses of the inverse trade-conflict relationship, but is the opposite of the conclusion reached by Gartzke et al. (2001), who reject the opportunity cost argument in a game-theoretic framework. As a result of this paper's findings, one cannot dismiss the opportunity cost argument as the explanation why trading nations fight less. Instead this study reaffirms the central position of opportunity costs as the basis for the inverse trade-conflict relationship, thus implying that one need not rely on signaling.
        KW  - war
KW  - trade
KW  - trade-conflict relationship
KW  - interdependence
KW  - conflict
KW  - incomplete information game
KW  - signaling
        ER  -