Dispute Resolution Institutions and Strategic Militarization

A central question in political science is how to best manage information asymmetries and commitment problems when disputes arise between states. We argue that existing work miss an important feature: dispute settlement institutions shape the incentives for entering disputes. Because war is the down-side risk from entering a dispute, institutions that reduce the chances of war-fighting may increase dispute initiation and incentivize militarize. We develop a simple crisis bargaining model with both militarization decisions and bargaining behavior and examine how bilateral communication and third-party involvement alter the incentives. Seemingly effective institutions that improve the chance of peace for a given distribution of military strength can actually lower the chance of peace once one accounts for distortions to militarization decisions. To illustrate the value of this perspective we show how intervention by a mediator concerned only with resolving the crisis turns out to create optimal militarization and bargaining incentives. ∗Princeton University, Department of Politics. †Columbia University, Departments of Political Science and Economics. ‡Princeton University, Department of Politics. §Warwick University, Department of Economics.