Working Paper: CEPR ID: DP3947
Authors: Gilat Levy; Ronny Razin
Abstract: In this Paper, we provide an explanation of the democratic peace hypothesis, i.e., the observation that democracies rarely fight one another. We show that in the presence of information asymmetries and strategic complements, the strategic interaction between two democracies differs from any other dyad. In our model, two democracies induce the highest probability of peaceful resolution of conflicts. But it takes two for peace; one democracy involved in a conflict does not necessarily increase the probability of a peaceful resolution compared to a conflict between two non-democratic regimes.
Keywords: cheap talk; democratic peace
JEL Codes: D82
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| strategic interaction between two democracies (F55) | higher probability of peaceful resolution of conflicts (D74) |
| asymmetric information in democracies (D82) | facilitates coordination on concessions (F42) |
| democratic leaders can communicate credible information (D72) | increases likelihood of mutual concessions (D74) |
| presence of democracies on both sides of a conflict (D74) | crucial for achieving peaceful resolutions (D74) |
| democratic country facing autocracy (D72) | no-concession equilibrium (D50) |