With Iris Malone.
Abstract: Conventional wisdom about economic interdependence and international conflict predicts increasing opportunity costs make war less likely, but some wars occur after trade flows grow. Why? We develop a model that shows a nonmonotonic relationship exists between the costs and probability of war when there is uncertainty about resolve. Under these conditions, increasing the costs of an uninformed party’s opponent has a second-order effect of exacerbating informational asymmetries about that opponent’s willingness to maintain peace. We derive precise conditions under which war can occur more frequently and empirically showcase the model’s implications through a case study of Sino-Indian relations from 1949 to 2007. This finding challenges how scholars traditionally believe economic interdependence affects the probability of war; it demonstrates instruments like trade do not solely mediate the probability of war through opportunity costs.