Domestic Constraints in Crisis Bargaining

Abstract

I study how political bias and audience costs impose domestic institutional constraints that affect states' capacity to reach peaceful agreements during crises. With a mechanism design approach, I show that the existence of peaceful agreements hinges crucially on whether the resource being divided can appease two sides of the highest type (i.e. the maximum war capacity). The derivation has two major implications. On the one hand, if war must be averted, then political leaders are not incentivized by audience costs to communicate private information; they will pool on the strategy that induces the maximum bargaining gains. On the other hand, political bias matters for the scope of peace because it alters a state's expected war payoff.