The Calculus of Conflict

Adam C. Smith

Advisor: Peter J. Boettke

Committee Members: Daniel Houser, Todd Zywicki, School of Law, Richard Wagner, Peter Leeson

December 07, 2010, 09:30 AM to 12:30 PM


This dissertation addresses how we conceive of conflict from an opportunity cost perspective. Traditionally, economics posits the opportunity cost of choice as taking place in the context of tradeoffs between certain productive and consumptive uses of a person’s resources, with this tradeoff taking place independently of the decisions of others. While this simple depiction of choice is suitable in markets where property rights are well-defined and outside coercion is minimal, it is ill-suited to contexts involving conflict. In conflictual environments, the opportunity cost of choice encompasses not only how the person allocates her resources to promote certain actions, but also how others will react to these actions. Thus, conflict by definition is nested within an interaction with others and therefore must be depicted as such when determining the opportunity cost considerations or calculus of conflict. By exposing the interactive nature of conflict using a theoretical framework supplemented by experimental and case study analysis, this dissertation demonstrates that resource allocation across productive possibilities is only part of the calculus of conflict. Participants engaging in acts of conflict must reckon with the actions of others. The importance of this contribution is that it reveals that a decrease in the cost of resources used in conflict does not necessitate an increase in the incidence of conflict, as a naïve application of standard demand theory would predict. Instead, the more comprehensive opportunity cost framework I employ shows that it is only when we account for both the costs of these resources and the costs due to the interaction itself that we can apply the law of demand. The implication for research in conflict theory is that the objective resource costs of conflict must be analyzed alongside of the interactive costs of conflict when determining actual incidence of conflict. Incorporating these interactive costs yields a far more optimistic outlook of the ability of persons to cooperate, even under the direst of circumstances, such as takes place in environments characterized by conflict and violence.