Abstract: Many international organizations reduce the costs states suffer in times of conflict. Critics argue that the expectation of aid perversely incentivizes states to initiate conflict more often. I develop a model to formalize this intuition and show that institutions may still prove helpful in two ways. First, if conflict frequently occurs without the institution, aid reduces expected costs despite possibly causing more conflict. Second, aid can have a second-order effect of reducing uncertainty about the costs of conflict; thus, aid can also counterintuitively decrease the probability of conflict and save on the corresponding costs. Whether aid ultimately helps or hurts depends on how the organization distributes benefits to the parties.
Published in International Studies Quarterly.