  I study how political bias and audience costs impose domestic institutional
constraints that affect states' capacity to reach peaceful agreements during
crises. With a mechanism design approach, I show that the existence of peaceful
agreements hinges crucially on whether the resource being divided can appease
two sides of the highest type (i.e. the maximum war capacity). The derivation
has two major implications. On the one hand, if war must be averted, then
political leaders are not incentivized by audience costs to communicate private
information; they will pool on the strategy that induces the maximum bargaining
gains. On the other hand, political bias matters for the scope of peace because
it alters a state's expected war payoff.
