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date: 23 March 2019

Abstract and Keywords

This article considers the strategic transmission of information, though in a variety of ways, including not only costly signaling through actions to convey information, but also engaging in limited war as a means to learn about the opponent's strength. It provides a useful review of the mechanism design approach to the problem. The article implies that conflict and inefficiencies are to be expected whenever parties have optimistic prospects on the outcome of the all-out conflict. It also examines the recent literature that has challenged this view. These new contributions consider the existence of limited confrontations that allow bargaining to resume. In the presence of private information on the balance of strengths, that means that conflict can convey information and potentially become a bargaining instrument.

Keywords: strategic transmission, information transmission, bargaining, conflict negotiation

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