Mediation and Peace

TLDR

Arbitration is generally infeasible among sovereign states, and unmediated communication fails to achieve optimal welfare due to lack of confidentiality. The study applies mechanism design to international conflict resolution. The authors propose recommendation strategies that conceal a weak party’s vulnerability, enabling mediators to secure arbitration‑equivalent outcomes despite unenforceability. The analysis shows that unenforceability does not hinder mediation; mediators can match arbitrators’ effectiveness by gathering confidential information and issuing recommendations that yield equivalent payoffs.

Abstract

This article applies mechanism design to the study of international conflict resolution. Standard mechanisms in which an arbitrator can enforce her decisions are usually not feasible because disputants are sovereign entities. Nevertheless, we find that this limitation is inconsequential. Despite only being capable of making unenforceable recommendations, mediators can be equally effective as arbitrators. By using recommendation strategies that do not reveal that one player is weak to a strong opponent, a mediator can effectively circumvent the unenforceability constraint. This is because these strategies make the strong player agree to recommendations that yield the same payoff as arbitration in expectation. This result relies on the capability of mediators to collect confidential information from the disputants, before making their recommendations. Simple protocols of unmediated communication cannot achieve the same level of ex ante welfare, as they preclude confidentiality.