Political Bias and War

We examine how countries’ incentives to go to war depend on the “political bias” of their pivotal decision-makers. This bias is measured by a decision maker’s risk/reward ratio from a war compared to that of the country at large. If there is no political bias, then there are mutually acceptable transfers from one country to the other that will avoid a war in the presence of commitment or enforceability of peace treaties. There are cases with a strong enough bias on the part of one or both countries so that war cannot be prevented by any transfer payments. Our results shed some new light on the uneven contender paradox and the interpretation of the “democratic peace”. We examine countries’choices of the bias of their leaders and show that when transfers are possible at least one country will choose a biased leader as that leads to a strong bargaining position and extraction of transfers. (JEL C78, D74) The rich history of war provides evidence of its devastating consequences and of the wide variety of circumstances that lead to it.1 While there is much that we know about wars, there is still much to be learned about how the choice to go to war di¤ers across countries and circumstances, and in particular how this relates to the interplay between economic circumstances and political regimes. Although religious and ethnic con‡icts have played key roles in many wars, balance of power, territorial disputes, expansion of territory, and access to key resources or wealth are often either involved or the primary driving force behind wars.2 In this paper, we build a model that serves as a basis for understanding how political structure (crudely modeled) interacts with economic incentives to determine when wars occur. Our model of war is described as follows. Two countries are faced with a possible war, and each knows their respective probability of winning, which depends on their respective wealth levels. If a war ensues, each country incurs a cost and then the victor claims a portion