Signaling or Safeguarding: The Logic of Mobilization in Crisis Bargaining

2020-05-08T01:20:56Z (GMT) by Anthony V Pierucci
This dissertation reexamines the often cited conclusion in diplomatic crisis bargaining that sunk cost signals, such as military mobilization and arms races, are inefficient compared to tied hands signals. This conclusion ignores the the investment potential that the most frequent examples of sunk cost signaling have in terms of increasing preparedness for war. Through a novel game theoretic model, I demonstrate that signals with a sunk investment can be optimal in comparison to tied hands signals. The conclusion of the model suggests that signals with a sunk investment, such as mobilization, have value as a hedged bet against deterrence, increasing in value as the investment would make the state more powerful in war, the state is pessimistic about deterrence, and the state is risk averse. I contextualize these conclusions in historical case studies of the Berlin Crisis and NATO intervention in Kosovo.