Using Incentives to Solve the Israeli-Palestinian Conflict

The very interesting Bruce Bueno de Mesquita has a good analysis of the Israeli-Palestinian conflict and a clever suggestion for moving forward:

“In my view, it is a mistake to look for strategies that build
mutual trust because it ain’t going to happen. Neither side has any
reason to trust the other, for good reason,” he says. “Land for peace
is an inherently flawed concept because it has a fundamental commitment
problem. If I give you land on your promise of peace in the future,
after you have the land, as the Israelis well know, it is very costly
to take it back if you renege. You have an incentive to say, ‘You made
a good step, it’s a gesture in the right direction, but I thought you
were giving me more than this. I can’t give you peace just for this,
it’s not enough.’ Conversely, if we have peace for land–you disarm, put
down your weapons, and get rid of the threats to me and I will then
give you the land–the reverse is true: I have no commitment to follow
through. Once you’ve laid down your weapons, you have no threat.”

Bueno de Mesquita’s answer to this dilemma, which he discussed with
the former Israeli prime minister and recently elected Labor leader
Ehud Barak, is a formula that guarantees mutual incentives to
cooperate. “In a peaceful world, what do the Palestinians anticipate
will be their main source of economic viability? Tourism. This is what
their own documents say. And, of course, the Israelis make a lot of
money from tourism, and that revenue is very easy to track. As a
starting point requiring no trust, no mutual cooperation, I would
suggest that all tourist revenue be [divided by] a fixed formula based
on the current population of the region, which is roughly 40 percent
Palestinian, 60 percent Israeli. The money would go automatically to
each side. Now, when there is violence, tourists don’t come. So the
tourist revenue is automatically responsive to the level of violence on
either side for both sides. You have an accounting firm that both sides
agree to, you let the U.N. do it, whatever. It’s completely
self-enforcing, it requires no cooperation except the initial agreement
by the Israelis that they are going to turn this part of the revenue
over, on a fixed formula based on population, to some international
agency, and that’s that.”

The article cited has a lot more on Bueno de Mesquita and the remarkable series of accurate predictions that he has made using rational choice modeling.  See also this piece from Science News, The Mathematical Fortune Teller.


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