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The author distinguishes between two types of costly signals that state leaders might employ in trying to credibly communicate their foreign policy interests to other states, whether in the realm of grand strategy or crisis diplomacy. Leaders might either (a) tie hands by creating audience costs that they will suffer ex post if they do not follow through on their threat or commitment (i.e., costs arising from the actions of domestic political audiences) or (b) sink costs by taking actions such as mobilizing troops that are financially costly ex ante. Analysis of a game model depicting the essentials of each case yields two principal results. First, in the games ' equilibria, leaders never bluff with either type of signal; they do not incur or create costs and then fail to respond if challenged. Second, leaders do better on average by tying hands, despite the fact that the ability to do so creates a greater ex ante risk of war than does the use of sunk-cost signals. These results and the logic behind them may help explain some empirical features of international signaling, such as many crises' appearance as competitions in creating domestic political audience costs. They also generate empirical puzzles, such as why the seemingly plausible logic of inference that undermines bluffing in the model does not operate in all empirical cases.
When a state's leaders threaten to use military force against another state, they generally would prefer not to carry out the threat, even if they would, in fact, be willing to. This is true not only in common cases of coercive diplomacy, such as that intermittently practiced by the Western powers in Bosnia, but also for would-be conquerors. As Clausewitz ([1830] 1984, 370) observed, "The aggressor is always peace-loving; he would prefer to take over our country unopposed." It seems quite likely that the main reason for this preference not to have to resort to force is that military operations are typically expensive and risky, obviously so for the soldiers who must be coerced or otherwise convinced to fight, but also for the leaders who order war.1
Combined with the fact that leaders cannot directly observe each other's willingness to resort to force, this generally known disinclination creates one of the central...