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A line in the sand: prospect theory and Nash arbitration in resolving territorial disputes

Abstract : Territorial disputes -- often fueled by ethnic animosity or competition for scarce resources -- are often catalysts for conflicts that can lead to war. To reduce the prospect of conflict, and larger-scale war, peaceful and enduring resolutions to territorial problems are desirable. The process of conflict resolution should provide parties with a lasting, mutually agreeable outcome. Prospect theory has the potential to determine the types of territorial disputes that may be candidates for an arbitrated resolution. Nash arbitration may provide an optimal solution to both parties, forestalling conflict escalation. This thesis examines how prospect theory and Nash arbitration are applicable, acceptable, and durable, by operationalizing a nonviolent approach to territorial dispute resolution. Specifically, prospect theory is integrated into game theory, and Nash arbitration results are geographically implemented. The durability of arbitrated results also is tested.