Delegating War
Abstract: Governments often delegate the fight for control over natural or political resources to local armed groups. This paper presents a model of proxy war in which governments delegate conflict by sending non-negotiable offers to militias. Contracts are composed of monetary transfers and of a sharing rule of political influence. Armed groups are positioned along a continuum representing the ideological misalignment between each militia and its government sponsor. Using a principal-agent model with two principals and two agents, I characterize the optimal contracts under complete and incomplete information about the militias' ideological positions. The analysis shows that with incomplete information armed groups receive lower transfers but are left with higher political independence. When governments strategically choose whether to fight by delegation or engage directly in conflict, the equilibria can be characterized in function of the local support to militias. If governments compete to recruit the same armed group, the militia generally carves out higher rents and pledges allegiance to the government ideologically closer.
