I don't think capitulation should exist, because it would make the reason to attack somebody's core provinces all the more appealing. Let's say you take the United Kingdom's core. If capitulation existed, you would get the none core provinces for free, right? That is FREE land, the only free land you deserve is the land you start with.

In real life, many times war leads to a treaty, but since this is a game, people don't have to worry about anything that would matter to rulers in real life. In real life, rulers are overthrown by rebel groups in their own country, but in the game, rulers are overthrown solely because of inactivity. In the game, the ruler doesn't have to worry about how the people feel about war, or what the people want at all, they just do it. You cannot replicate war online because people recognize the lack of responsibility on games. In real life, you better recognize you are responsible for your people, and in a democracy, you should choose based on what the people need.

Frankly, capitulation already occurs through the art of rebellion. If a nation loses it's capital, and has far-flung provinces while being at war with many other players and short on Food and Oil, etc....then their provinces will start rebelling. And, like in real life, they aren't necessarily going to rebel to the conquering invader that sacks their cities.

I actually really like the rebellion part of this game as it gives you yet another reason to manage your national morale (lowering morale can lead to rebellion).