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Strategic Ambiguity and Arms Proliferation

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Author Info
Sandeep Baliga
Tomas Sjöström

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Abstract

A big power is facing a small power that may have developed weapons of mass destruction. The small power can create strategic ambiguity by refusing arms inspections. We study the impact of strategic ambiguity on arms proliferation and welfare. Strategic ambiguity is a substitute for actually acquiring weapons: ambiguity reduces the incentive for the small power to invest in weapons, which reduces the threat of arms proliferation. But strategic ambiguity hides information, and this can lead to costly mistakes. Cheap-talk messages can be used to trigger inspections when such mistakes are particularly costly. Tough messages that trigger inspections always imply a greater risk of arms proliferation. (c) 2008 by The University of Chicago. All rights reserved..

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File URL: http://www.journals.uchicago.edu/doi/pdf/10.1086/595016
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Publisher Info
Article provided by University of Chicago Press in its journal Journal of Political Economy.

Volume (Year): 116 (2008)
Issue (Month): 6 (December)
Pages: 1023-1057
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Handle: RePEc:ucp:jpolec:v:116:y:2008:i:6:p:1023-1057

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  4. David M Kreps & Robert Wilson, 2003. "Sequential Equilibrium," Levine's Working Paper Archive 618897000000000813, David K. Levine. [Downloadable!]
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  5. Sandeep Baliga & Tomas Sj–str–m, 2004. "Arms Races and Negotiations," Review of Economic Studies, Blackwell Publishing, vol. 71(2), pages 351-369, 04. [Downloadable!] (restricted)
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  6. Border, Kim C & Sobel, Joel, 1987. "Samurai Accountant: A Theory of Auditing and Plunder," Review of Economic Studies, Blackwell Publishing, vol. 54(4), pages 525-40, October. [Downloadable!] (restricted)
  7. Paul R. Milgrom, 1981. "Good News and Bad News: Representation Theorems and Applications," Bell Journal of Economics, The RAND Corporation, vol. 12(2), pages 380-391, Autumn. [Downloadable!] (restricted)
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  8. Crawford, Vincent P & Sobel, Joel, 1982. "Strategic Information Transmission," Econometrica, Econometric Society, vol. 50(6), pages 1431-51, November. [Downloadable!] (restricted)
  9. Mookherjee, Dilip & Png, Ivan, 1989. "Optimal Auditing, Insurance, and Redistribution," The Quarterly Journal of Economics, MIT Press, vol. 104(2), pages 399-415, May. [Downloadable!] (restricted)
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  1. J. Atsu Amegashie, 2009. "Third-Party Intervention in Conflicts and the Indirect Samaritan's Dilemma," CESifo Working Paper Series CESifo Working Paper No. , CESifo Group Munich. [Downloadable!]
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