Rationality as a Barrier to Peace: Micro-evidence from Kosovo

Despite a significant expansion of the literature on conflicts and fragility of states, only a few systematic attempts have been made to link the theoretical literature on social conflicts to the available micro-level information about the people who are involved in these conflicts. We address this lacuna in the literature using a household-level data set from Kosovo. Our analysis suggests that it is individually rational for competing ethnic communities, Kosovar Albanians and Kosovar Serbs, to resist a quick agreement on a social contract to share the region's resources.