Why is there no peace in Israel? - The Effect of Ambiguity on Peace-making
نویسنده
چکیده
Motivated by the peace process in Israel I define a peace-making game by positive aggregate externalities and strategic complements and provide a characterization of equilibria without uncertainty. I argue that under the realistic scenario two pure equilibria exists involving either full peace-making efforts or no at all by both parties. I show that under Knightian uncertainty, that is uncertainty in which individuals are unable to form additive probability judgments, only the equilibrium involving no peace-making efforts at all exists. It is an direct application of the work on Choquet expected utility theory in strategic games by [1] Eichberger/Kelsey (2001). JEL-Classifications: C70, C72.
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