Optimizing Conflicts in the Formation of Strategic Alliances

Coalition setting among a set of actors (countries, firms, individuals) is studied using concepts from the theory of spin glasses. Given the distribution of respective bilateral propensities to either cooperation or conflict, the phenomenon of local aggregation is modeled. In particular the number of coalitions is determined according to a minimum conflict principle. It is found not to be always two. Along these lines, previous studies are revisited and are found not to be consistent with their own principles. The model is then used to describe the fragmentation of former Yugoslavia. Results are compared to the actual situation.