Though both journalists and the academic literature on ethnic conflict give the opposite impression, peaceful and even cooperative relations between ethnic groups are far more common than is large-scale violence. We seek to explain this norm of interethnic peace and how it occasionally breaks down, arguing that formal and informal institutions usually work to contain or “cauterize” disputes between individual members of different groups. Using a social matching game model, we show that local-level interethnic cooperation can be supported in essentially two ways. Inspiral equilibria, disputes between individuals are correctly expected to spiral rapidly beyond the two parties, and fear of this induces cooperation “on the equilibrium path.” Inin-group policing equilibria, individuals ignore transgressions by members of the other group, correctly expecting that the culprits will be identified and sanctioned by their own ethnic brethren. A range of examples suggests that both equilibria occur empirically and have properties expected from the theoretical analysis.
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