We construct a dynamic theory of civil conflict hinging on inter-ethnic trust and trade. The model economy is … beliefs on the average propensity to trade of the other group. Since conflict disrupts trade, the onset of a conflict signals … after each conflict episode. Third, "accidental" conflicts that do not reflect economic fundamentals can lead to a permanent …

beliefs on the average propensity to trade of the other group. Since conict disrupts trade, the onset of a conflict signals … each conflict episode. Third, "accidental" conflicts that do not reect economic fundamentals can lead to a permanent … breakdown of trust, plunging a society into a vicious cycle of recurrent conflicts (a war trap). The incidence of conflict can …