A Game Theoretical Analysis of Economic Sanction

22 Pages Posted: 26 Feb 2011

See all articles by Khalifany Ash Shidiqi

Khalifany Ash Shidiqi

affiliation not provided to SSRN

Rimawan Pradiptyo

Universitas Gadjah Mada (UGM) - Department of Economics

Date Written: February 25, 2011

Abstract

Economic sanction has been widely used and increasingly a popular tool in maintaining peace and political stability in the world. The use of economic sanction, as opposed to the use of military power, to punish target countries have been supported by the Charter of United Nations (UN). Tsebelis (1990) modelled economic sanctions using game theory and found that any attempt to increase the severity of the sanctions was counterintuitive, namely the policy reduced the likelihood of sender country(s) in enforcing economic sanction, however, it did not change the probability of the target country(s) in violating international agreement/law. This paper focuses on the refinement of the sanction game proposed by Tsebelis (1990) to analyse international relations. Recent findings from various studies on the effectiveness of economic sanction have been used to reconstruct the game. In contrast to Tsebelis' (1990) findings, any attempt to increase the severity of economic sanction may reduce the probability of the target country(s) in violating international agreement/law. A similar result was obtained in the case for which the sender country(s) applies any policy in preventing violation of international agreement/law by providing aids, assistances, and incentives to the target country.

Keywords: International Relation, Economic Sanction, the Sanction/Inspection Games, Mixed Strategy Equilibrium

JEL Classification: C79, K42, F51

Suggested Citation

Ash Shidiqi, Khalifany and Pradiptyo, Rimawan, A Game Theoretical Analysis of Economic Sanction (February 25, 2011). Available at SSRN: https://ssrn.com/abstract=1769423 or http://dx.doi.org/10.2139/ssrn.1769423

Khalifany Ash Shidiqi (Contact Author)

affiliation not provided to SSRN ( email )

No Address Available

Rimawan Pradiptyo

Universitas Gadjah Mada (UGM) - Department of Economics ( email )

Bulaksumur
Sleman
Yogyakarta, Daerah Istimewa Yogyakarta 55281
Indonesia

HOME PAGE: http://rimawan.staff.ugm.ac.id

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