Suppose a country discovers an oil deposit on its border with a second country. Both expect to receive positive payoffs if they fight over it. Does this explain war?
- If states refuse to bargain, they will fight.
- Fighting is costly. As such, even if war provides a positive payoff for both countries, a bargained resolution should be more profitable for both.
- The question is whether this is a numerical quirk for the particular example or indicative of a trend. We will answer that in the next lecture.