Signaling in the Shadow of Conflict

Abstract

Army mobilization, testing missiles, staging demonstrations, sexual violence, or even terrorist actions can all be interpreted as signals of military resolve or strength by a belligerent party. If so, what can its opponent infer from this sort of actions? This paper studies this question in various environments. In ultimatum games, in which the uninformed player makes a take-it-or-leave-it offer, signaling is completely uninformative no matter the nature of a party's private information. Other bargaining protocols fare better and so does the possibility that a country's costly actions do not solely serve to inform its enemy. The shadow of conflict does not completely impede information transmission via costly signaling, but it does make it harder. The model indicates that the intent of belligerents' strategic behavior prior or during conflicts may be difficult to assess without evaluating the broader situation.

Keywords: war, international relations, information revelation, separation, costly miscalculations

JEL Classification: D70, D74, D83