Information transmission in the shadow of conflict

50 Pages Posted: 25 Jan 2018 Last revised: 15 Aug 2022

See all articles by Stephane Wolton

Stephane Wolton

London School of Economics & Political Science (LSE) - Department of Government

Date Written: June 16, 2019

Abstract

Miscalculations due to lack of information are often seen as one of the main causes of war. Belligerents, though, often have multiple channels to share information and avoid a costly conflict. Yet, for information sharing to be useful, the information shared must be credible. In a fully decentralised setting, with no mediator available, I look at two ways a privately informed party can communicate its resolve to its opponent: sunk cost signals and audience costs. I show that costly signaling simply does not work, the only equilibrium is pooling with no signaling. Audience costs fare much better and can allow for full revelation of a belligerent's private information. This difference results from who pays the cost of transmitting information: the privately informed party with sunk signals, its opponent with audience costs as these costs reduce the value of peace for the belligerent who holds private information.

Keywords: war, signaling, bargaining, avoiding conflicts, audience costs

JEL Classification: D70, D74, D83

Suggested Citation

Wolton, Stephane, Information transmission in the shadow of conflict (June 16, 2019). Available at SSRN: https://ssrn.com/abstract=3100989 or http://dx.doi.org/10.2139/ssrn.3100989

Stephane Wolton (Contact Author)

London School of Economics & Political Science (LSE) - Department of Government ( email )

Houghton Street
London, WC2A 2AE
United Kingdom

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