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Cycles of Distrust: An Economic Model

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Show simple item record Acemoglu, Daron Wolitzky, Alexander 2012-09-11T23:22:34Z 2012-09-11T23:22:34Z 2012-06-17
dc.description.abstract We propose a model of cycles of distrust and conflict. Overlapping generations of agents from two groups sequentially play coordination games under incomplete information about whether the other side consists of “extremists” who will never take the good/trusting action. Good actions may be mistakenly perceived as bad/distrusting actions. We also assume that there is limited information about the history of past actions, so that an agent is unable to ascertain exactly when and how a sequence of bad actions originated. Assuming that both sides are not extremists, spirals of distrust and conflict get started as a result of a misperception, and continue because the other side interprets the bad action as evidence that it is facing extremists. However, such spirals contain the seeds of their own dissolution: after a while, Bayesian agents correctly conclude that the probability of a spiral having started by mistake is sufficiently high, and bad actions are no longer interpreted as evidence of extremism. At this point, one party experiments with a good action, and the cycle restarts. We show how this mechanism can be useful in interpreting cycles of ethnic conflict and international war, and how it also emerges in models of political participation, dynamic inter-group trade, and communication - leading to cycles of political polarization, breakdown of trade, and breakdown of communication. en_US
dc.publisher Cambridge, MA: Department of Economics, Massachusetts Institute of Technology en_US
dc.relation.ispartofseries Working paper, Massachusetts Institute of Technology, Dept. of Economics;12-19
dc.rights An error occurred on the license name. en
dc.rights.uri An error occurred getting the license - uri. en
dc.subject communication en_US
dc.subject cooperation en_US
dc.subject coordination en_US
dc.subject ethnic conflict en_US
dc.subject distrust en_US
dc.subject polarization en_US
dc.subject trust en_US
dc.subject over-lapping generations en_US
dc.title Cycles of Distrust: An Economic Model en_US
dc.type Working Paper en_US

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