Conflict and Uncertainty: A Dynamic Approach

6 Conclusion

We propose a general framework in which non-myopic agents choose effort levels and investment
in conflict technology under uncertainty. The model is a dynamic game with N agents in infinite
periods of time.

The allocation rule for the resource in dispute will determine the equilibrium concept and method
needed to solve the model. This allows to think of many economic situations involving the distri-
bution of a valuable resource without defined property rights: conflicts, bussiness races, auctions
etc.

The model can be easily solved for a stable equilibrium under a differentiable share rule through
dynamic programming techniques. We considered different dynamic mechanisms. Dependence of
investment technology on past success allows the weaker agents to adapt to harder environments
and keep on struggling in the conflict.

We consider that the valuation on the resource on dispute should change over the time. We include
this fact by endogenizing the valuation with the recent success on the conflict. This mechanism
increases the deviations of the variables with respect to the deterministic steady-state, generating a
longer impact of transitory shocks.

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