Long Wars

We study whether the Coase conjecture holds for bargaining during war. Two players, A and B, contest a divisible resource until one side collapses or agreement is reached. If player B is militarily strong, then he insists on getting a large share. However, player A only concedes this large share if player B credibly signals his strength by fighting a sufficiently long war. Thus, the Coase conjecture fails, and asymmetric information about military strength explains why long wars may be inevitable. Using a mechanism design approach, we derive a lower bound on the expected duration of war.