What is the conflict in the short story "The Bet" by Anton Chekhov?

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Anton Chekhov's "The Bet" focuses on a conflict between a banker and a young lawyer who enter into a disagreement at a party hosted by the banker. While the banker believes that capital punishment is more humane than life imprisonment, the lawyer claims that he would choose life imprisonment over a death sentence. The argument becomes so ferocious that the banker bets the lawyer two million rubles that he cannot spend fifteen years in captivity. The lawyer takes the banker up on this bet, and he proceeds to submit himself to voluntary imprisonment for the next fifteen years in the banker's garden house. 

A secondary conflict is the fact that the banker, now at the end of the fifteen-year term, will be financially ruined by paying out the two million rubles to satisfy the terms of the bet; he is considering murdering the lawyer. The lawyer, on the other hand, is equally as ruined by the conflict, feeling utter hatred for life after spending fifteen years in isolation. 

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I would say that there are two main conflicts in the story.  The first conflict is a simple "who is right" argument.  Is it better to punish someone by capital punishment or is it better to do life in prison?  The lawyer believes that prison is better; the banker believes that death is better.  In comes the bet.  The banker puts up 2 million rubles and the lawyer agrees to stay under house arrest for 15 years.

Once the time in prison begins, the conflict switches to an internal conflict for both characters.  For most of the 15 years, the internal conflict is centered squarely on the lawyer.  He's definitely struggling with solitary confinement, and what makes it worse is knowing that he can walk out at any time (but lose the bet).  By the end he is at peace with the prison sentence but in conflict with everything that he has learned about humans and society.  He's disgusted with all of it and intentionally loses the bet with 5 minutes to go. 

The other internal conflict is the conflict raging inside of the banker as the bet nears its conclusion.  The banker is almost completely broke.  Paying the 2 million rubles will wipe him out.  The banker decides to kill the lawyer and frame somebody for the act.  He's wrestling with knowing how wrong that is and knowing that he really wants to keep his money. 

Chekhov makes it clear that by the end of story, both men have been utterly broken by their own internal conflicts.  

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