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Kim: Endogenous Choice of a Mediator
In this paper, I assume that a player cannot pay off another player to prevent war. Without this
assumption, the analysis becomes even more complicated, but it would be desirable to relax the
assumption. On another note, if I take the model and raise the payoffs such that choosing the ex
ante efficient mediator becomes more valuable for the weak types; then the choice of mediator does
not change, and the outcome actually gives a higher interim payoff for the weak types. But in fact,
the inefficient mediator is chosen by a wider range of the probability of the strong type. This result
implies that what causes players to more likely move toward an ex ante efficient mediator renders
the “signaling” problem more perverse. Thus, even though players’ types are close to wanting to
have an ex ante efficient outcome in which the world should be a better place; in fact, things get
worse.
Through this paper, I hope to make a contribution to wider applications of third party intervention
to explain how and why a third party is chosen inefficiently in various economic, social,
and political interactions. One of many applications of my model is to international conflict. 28
Mediation, arbitration, and peace talks are thought of as optimal international conflict resolution
institutions that attempt to improve the efficiency of the negotiation. However, when adversaries
attempt peace negotiations over issues such as territorial boarders or security, they do not always
choose efficient third parties. Although I have focused my application of the model to international
relations, the model could apply equally to other forms of bargaining games, such as collective
bargaining negotiations between firms and unions in an industrial relations context. In addition,
in an economic setting, the research could look into situations in which two or more firms jointly
bargain over selecting an investment bank to advise them on mergers.
References
Cramton, Peter C. and Thomas R. Palfrey. 1995. “Ratifiable Mechanisms: Learning from Disagreement.”
Games and Economic Behavior 10(2):255–283.
Esö, Péter and James Schummer. 2009. “Credible Deviations from Signaling Equilibria.” International
Journal of Game Theory 48(3):411–430.
Farrell, Joseph. 1985. “Communication, Coordination and Nash Equilibrium.” Economics Letters
27(3):209–214.
28 Mediation efforts are a recurrent and potentially important feature of international conflict, and international
mediation is an intriguing facet of international conflict.
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