DP3947 It Takes Two: An Explanation of the Democratic Peace

Author(s): Gilat Levy, Ronny Razin
Publication Date: June 2003
Keyword(s): cheap talk, democratic peace
JEL(s): D82
Programme Areas: Public Economics
Link to this Page: cepr.org/active/publications/discussion_papers/dp.php?dpno=3947

In this Paper, we provide an explanation of the democratic peace hypothesis, i.e., the observation that democracies rarely fight one another. We show that in the presence of information asymmetries and strategic complements, the strategic interaction between two democracies differs from any other dyad. In our model, two democracies induce the highest probability of peaceful resolution of conflicts. But it takes two for peace; one democracy involved in a conflict does not necessarily increase the probability of a peaceful resolution compared to a conflict between two non-democratic regimes.