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Varangian

First Lieutenant
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Nov 18, 2003
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Playing as Shiba, I offered one of my smaller neighbors peace after destroying his army and laying siege to all 4 of his remaining provinces - answer no. The n another province falls and I ask again - no. I take another and ask again - no. With one province left to them I ask again, white peace - no.

This makes the game almost unplayable. Once war starts you have to ekiminate the other clan.

Do they ever except peace?
 
They do but it's sometimes bit tricky to get them to accept. Basically you need to be considerabaly bigger than them and have crushed their armies, and sometimes the AI decides it's willing to either white peace, or even submit as a vassal. I have a feeling that the duration of the war is also a factor. I've sometimes had the AI accept white peace after long wars that haven't gone anywhere.
 
Yes, AI seems to consider somehow war exhaustion, but the game doesn't show that data. However, similar to war exhaustion in other paradox games, it might increase during wars. It means that you have to wait a couple of years to let your enemy accept your offer.
 
Funny I see this thread right now, because I just successfully demanded subjugation from an opponent that started out larger than I was. I decided to see how he felt about peace after I took just over half his land and wiped out pretty much his entire army, and to my surprise it said he would accept subjugation. So I offered it and his land was mine.