Fairness preferences as a cause of inefficient war

Abstract

Social psychologists, behavioral economists and biologists have long documented how fairness concerns motivate behavior, but workhorse bargaining models of war ignore this. I present a simple model in which a nation is challenged by an enemy (e.g., a terrorist attack). The nation’s political leader must decide between a peaceful solution (i.e., buying the enemy off) or war (i.e., hunt the enemy down). The leader, who has re-election incentives, knows that a fraction of voters has fairness preferences – they strongly feel that the enemy should be hunted down (i.e., “punished”) rather than bought off (i.e., “rewarded”). The model illustrates that fairness preferences can trigger war even if a peaceful solution is ten times cheaper.