Political War Conflicts have civil victims who must be compensated if society wants to get a long run agreement where arms are taken aside. It is because the Law will work eventually if the society does not compensate these victims. This note deals with this issue and shows that the rational solution of this type of political conflicts is through a compensation for those who were victims of the political war conflict. This compensation is under agreements where parts are “happy” with it. I use Game Theory under Sequential Equilibrium model to achieve this result.
Author: Humberto Bernal,
Economist,
e-mail: zhumber@gmail.com
Twitter: Humberto_Bernal.
Game Theory is a tool that lets researchers understand and take decisions when there are interactions between agents; in most of cases, there are rational agents in the environment where the Game Theory is applied. This note deals with an environment where there are two "players" who have an issue and have to take decisions in order to maximise their payoff; it means they are “Rational" and have “Common" knowledge about the environment. These two players are a cartel which has "power" on economic decisions and country Laws decisions, and a low income citizen who just counts with a Constitution printed. The main conclusion is: if the system is not corrupted at all, there is chance for the low income citizen can be favored by the Law with a high cost for cartel whether the cartel does not take the rational option for an agreement; on the other hand, if the system is full corrupted, the citizen will not have any chance to be favoured by the Law.
Environment
Lets start the “game”. This game is set up under private information scenario. This private information belongs to cartel and is related with level of corruption in the legal system; therefore, there are two types of legal systems: Corrupted System and No Corrupted System. Although the low income citizen does not know the type of the legal system where he is, he can think on probabilities for each type, so he can calculate his payoff. Figure 1 show the game.
Figure 1. Conflict - compensation game
(game under private information)
Strategies and payoff
There are strategies for each player and payoffs relate with these strategies; for instance, if cartel is agree with low income citizen about the issue under No Corrupted System, so each one get 20 units of payment. On the other hand, if the cartel is not agree with low income citizen, the payoff can be 5 units for cartel and 50 units for low income citizen. In the case of Corrupted System type, low income citizen will get a negative payment no matter his decision on call the Law or not call the Law.
Path for getting the solution
The solution of this “game" depends on probability that low income citizen assign to each type of system. If the low income citizen takes by sure the type of Corrupted System (it means P=1), his best strategy is No Law Claim or Law Claim but his payments are negative; however, if he gives a tiny chance for No Corrupted System (it mens (1-P) > 0 ), his best strategy is call the Law (Law Claim). Now, the cartel turn; because the cartel knows where it is, its best strategy will depend on it; if the type of system is Corrupted System, it will take No Agreement strategy and its payment will be 20 units; it meas that cartel does not pay attention to low income citizen issue. On the other hand, if the Law system is of type No Corrupted System, it can get a payment of 5 units and the low income citizen will get 50 units of payment whether its choose is No Agreement; therefore, its best strategy is Agreement where its payment is 20 units.
The Sequential Equilibrium
The solution of this “game" follows the principle of Sequential Equilibrium, it means each player maximise his payments in each state of game. Therefore, there are two Sequential Equilibriums that take my attention:
- If P=1, Cartel will choose No Agreement and low income citizen will choose No Law Claim. It means low income citizen does not count with legal instruments because of corruption.
- If P<1, Cartel will choose Agreement because low citizen has a credible threat to choose Law Claim. In other words, if cartel randomizes its strategies, its best strategy is to assign probability equal to 1 for Agreement strategy. It means low income citizen counts with legal instruments, so both of them get high payments, 20, 20.
Therefore, because in the real World the Law system is not full corrupted, the Sequential Equilibrium that will prevail is the second one. This type of equilibrium can be taken into account in political conflict such as the Colombian peace process. Victims of war conflict have to get a monetary and social compensation through agreements between illegal groups and government; on the other hand, the process can be unstable because the Law will come eventually, and government and illegal groups will face a hit which can end in protracted conflict armed again.
