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Matthew O. Jackson and Massimo Morelli 3.1 INTRODUCTION Why do wars occur and recur, especially in cases when the decisions involved are made by careful and rational actors? There are many answers to this question. Given the importance of the question, and the wide range of answers, it is essential to have a perspective on the various sources of conflict. In this chapter we provide a critical overview of the theory of war. In particular, we provide not just a taxonomy of causes of conflict, but also some insight into the necessity of and interrelation between different factors that lead to war. Let us offer a brief preview of the way in which we categorize causes of war. There are two prerequisites for a war between (rational) actors. One is that the costs of war cannot be overwhelmingly high. By that we mean that there must be some plausible situations in the eyes of the decisionmakers such that the anticipated gains from a war in terms of resources, power, glory, territory and so forth exceed the expected costs of conflict, including expected damages to property and life. Thus, for war to occur with rational actors, at least one of the sides involved has to expect that the gains from the conflict will outweigh the costs incurred. Without this prerequisite there can be lasting peace.1 Second, as cogently argued by Fearon (1995), there has to be a failure in bargaining, so that for some reason there is an inability to reach...