T
he Peace rating is a measure of how secure your people feel. As time passes without any disturbance of the peace, the initial concern people naturally have about a brand new area begins to fall, and they feel much safer.
Disturbances of the peace reduce the rating, though. Theft and riots both reduce the Peace rating, as does any destruction of property by barbarians or invaders. The people understand that they live in a dangerous time, where such evils as barbarians and invaders exist, but they expect their governor to protect them from it. Any lapse will have a severe effect on a city's citizens, reducing the Peace rating significantly. Only prolonged periods of security can bring it back up.
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