IDEAS home Printed from https://ideas.repec.org/a/ucp/jpolec/v116y2008i6p1023-1057.html
   My bibliography  Save this article

Strategic Ambiguity and Arms Proliferation

Author

Listed:
  • Sandeep Baliga
  • Tomas Sjöström

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.

Suggested Citation

  • Sandeep Baliga & Tomas Sjöström, 2008. "Strategic Ambiguity and Arms Proliferation," Journal of Political Economy, University of Chicago Press, vol. 116(6), pages 1023-1057, December.
    • Handle: RePEc:ucp:jpolec:v:116:y:2008:i:6:p:1023-1057
    DOI: 10.1086/595016
    as

    Download full text from publisher

    File URL: http://dx.doi.org/10.1086/595016
    File Function: link to full text
    Download Restriction: Access to full text is restricted to subscribers.
    File URL: https://libkey.io/10.1086/595016?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to look for a different version below or search for a different version of it.

    Other versions of this item:

    References listed on IDEAS

    as
    1. Sandeep Baliga & Tomas Sjöström, 2004. "Arms Races and Negotiations," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 71(2), pages 351-369.
    2. Kreps, David M & Wilson, Robert, 1982. "Sequential Equilibria," Econometrica, Econometric Society, vol. 50(4), pages 863-894, July.
    3. Kim C. Border & Joel Sobel, 1987. "Samurai Accountant: A Theory of Auditing and Plunder," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 54(4), pages 525-540.
    4. Dilip Mookherjee & Ivan Png, 1989. "Optimal Auditing, Insurance, and Redistribution," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 104(2), pages 399-415.
    5. repec:bla:jfinan:v:59:y:2004:i:6:p:2489-2529 is not listed on IDEAS
    6. Grossman, Sanford J, 1981. "The Informational Role of Warranties and Private Disclosure about Product Quality," Journal of Law and Economics, University of Chicago Press, vol. 24(3), pages 461-483, December.
    7. Joel Sobel, 1992. "How (and When) to Communicate with Enemies," Palgrave Macmillan Books, in: Mukul Majumdar (ed.), Equilibrium and Dynamics, chapter 16, pages 307-321, Palgrave Macmillan.
    8. Ian Ayres & Steven D. Levitt, 1998. "Measuring Positive Externalities from Unobservable Victim Precaution: An Empirical Analysis of Lojack," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 113(1), pages 43-77.
    9. Douglas W. Diamond, 1984. "Financial Intermediation and Delegated Monitoring," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 51(3), pages 393-414.
    10. Crawford, Vincent P & Sobel, Joel, 1982. "Strategic Information Transmission," Econometrica, Econometric Society, vol. 50(6), pages 1431-1451, November.
    11. 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.
    12. Townsend, Robert M., 1979. "Optimal contracts and competitive markets with costly state verification," Journal of Economic Theory, Elsevier, vol. 21(2), pages 265-293, October.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Sandeep Baliga & Tomas Sjostrom, 2013. "Bargaining and War: A Review of Some Formal Models," Korean Economic Review, Korean Economic Association, vol. 29, pages 235-266.
    2. Florian Ederer & Richard Holden & Margaret Meyer, 2018. "Gaming and strategic opacity in incentive provision," RAND Journal of Economics, RAND Corporation, vol. 49(4), pages 819-854, December.
    3. Kerwin, Jason & Pandey, Divya, 2023. "Navigating Ambiguity: Imprecise Probabilities and the Updating of Disease Risk Beliefs," IZA Discussion Papers 16478, Institute of Labor Economics (IZA).
    4. Golosov, Mikhail & Skreta, Vasiliki & Tsyvinski, Aleh & Wilson, Andrea, 2014. "Dynamic strategic information transmission," Journal of Economic Theory, Elsevier, vol. 151(C), pages 304-341.
    5. Long, Iain W., 2015. "Better feared than loved: Reputations and the motives for conflict," Journal of Economic Behavior & Organization, Elsevier, vol. 114(C), pages 46-61.
    6. Jin Yeub Kim, 2022. "Negotiation statements with promise and threat," Review of Economic Design, Springer;Society for Economic Design, vol. 26(2), pages 149-164, June.
    7. Sandeep Baliga & Tomas Sjostrom, 2012. "The Strategy of Manipulating Conflict," American Economic Review, American Economic Association, vol. 102(6), pages 2897-2922, October.
    8. J. Atsu Amegashie, 2009. "Third-Party Intervention in Conflicts and the Indirect Samaritan's Dilemma," CESifo Working Paper Series 2695, CESifo.
    9. Lang, Matthias & Wambach, Achim, 2013. "The fog of fraud – Mitigating fraud by strategic ambiguity," Games and Economic Behavior, Elsevier, vol. 81(C), pages 255-275.
    10. Yang-Ming Chang & Zijun Luo, 2017. "Endogenous Destruction In Conflict: Theory And Extensions," Economic Inquiry, Western Economic Association International, vol. 55(1), pages 479-500, January.
    11. Milan Zafirovski, 2020. "Indicators of Militarism and Democracy in Comparative Context: How Militaristic Tendencies Influence Democratic Processes in OECD Countries 2010–2016," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 147(1), pages 159-202, January.
    12. Ma, Siyu & Biran, Dov, 2023. "Attacking a nuclear facility: The impact of a noisy intelligence with unknown quality," Games and Economic Behavior, Elsevier, vol. 141(C), pages 472-483.
    13. Patrick Hummel, 2015. "Strategic ambiguity about military capacity with multiple adversaries," Journal of Theoretical Politics, , vol. 27(2), pages 288-300, April.
    14. Antonis Adam & Petros G. Sekeris, 2010. "Self-Containment: Achieving Peace in Anarchic Settings," Working Papers 1014, University of Namur, Department of Economics.
    15. Nakao, Keisuke, 2019. "Moving Forward vs. Inflicting Costs in a Random-Walk Model of War," MPRA Paper 96071, University Library of Munich, Germany.
    16. Jelnov, Artyom & Tauman, Yair & Zeckhauser, Richard, 2018. "Confronting an enemy with unknown preferences: Deterrer or provocateur?," European Journal of Political Economy, Elsevier, vol. 54(C), pages 124-143.
    17. Joungseok Park, 2016. "The Strategic Manipulation of Asymmetric Climate Conflicts," Working Papers 16-21, Department of Economics, Appalachian State University.
    18. Tørstad, Vegard & Wiborg, Vegard, 2023. "Commitment Ambiguity and Ambition in Climate Pledges," Institute on Global Conflict and Cooperation, Working Paper Series qt7gd693zp, Institute on Global Conflict and Cooperation, University of California.
    19. Di Maggio, Marco, 2009. "Accountability and Cheap Talk," MPRA Paper 18652, University Library of Munich, Germany.
    20. Nakao, Keisuke, 2019. "Modeling Deterrence by Denial and by Punishment," MPRA Paper 95100, University Library of Munich, Germany.
    21. Nakao, Keisuke, 2022. "Democratic Victory and War Duration: Why Are Democracies Less Likely to Win Long Wars?," MPRA Paper 112849, University Library of Munich, Germany.
    22. Jelnov, Artyom & Tauman, Yair & Zeckhauser, Richard, 2017. "Attacking the unknown weapons of a potential bomb builder: The impact of intelligence on the strategic interaction," Games and Economic Behavior, Elsevier, vol. 104(C), pages 177-189.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Ivan Balbuzanov, 2019. "Lies and consequences," International Journal of Game Theory, Springer;Game Theory Society, vol. 48(4), pages 1203-1240, December.
    2. Angelo Baglioni & Luca Colombo, 2009. "Managers’ Compensation And Misreporting: A Costly State Verification Approach," Economic Inquiry, Western Economic Association International, vol. 47(2), pages 278-289, April.
    3. Karel Janda, 2006. "Agency Theory Approach to the Contracting between Lender and Borrower [Smluvní vztah mezi věřitelem a dlužníkem z hlediska přístupu teorie zastoupení]," Acta Oeconomica Pragensia, Prague University of Economics and Business, vol. 2006(3), pages 34-47.
    4. Sendhil Mullainathan & Joshua Schwartzstein & Andrei Shleifer, 2008. "Coarse Thinking and Persuasion," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 123(2), pages 577-619.
    5. Caffera, Marcelo & Dubra, Juan & Figueroa, Nicolás, 2018. "Mechanism design when players’ preferences and information coincide," Mathematical Social Sciences, Elsevier, vol. 91(C), pages 56-61.
    6. Hyun Song Shin, 2006. "Disclosure Risk and Price Drift," Journal of Accounting Research, Wiley Blackwell, vol. 44(2), pages 351-379, May.
    7. Ying Yan, 1997. "Credit rationing, bankruptcy cost, and the optimal debt contract for small business," Working Papers (Old Series) 9702, Federal Reserve Bank of Cleveland.
    8. Choi, Jay Pil & Kristiansen, Eirik Gaard & Nahm, Jae, 2017. "Communication of soft information: Reputation and imperfect enforcement of reporting quality," Journal of Economic Behavior & Organization, Elsevier, vol. 136(C), pages 91-106.
    9. Davide IACOVONI & Alberto ZAZZARO, 2000. "Legal System Efficiency, Information Production, and Technological Choice: A Banking Model," Working Papers 129, Universita' Politecnica delle Marche (I), Dipartimento di Scienze Economiche e Sociali.
    10. Peter J. Simmons & Nongnuch Tantisantiwong, 2022. "The Socially Optimal Loan Auditing with Multiple Projects," Discussion Papers 22/07, Department of Economics, University of York.
    11. Hyun Song Shin, 2003. "Disclosures and Asset Returns," Econometrica, Econometric Society, vol. 71(1), pages 105-133, January.
    12. Rosa Ferrentino & Luca Vota, 2023. "The optimal financing of a conglomerate firm with hidden information and costly state verification," Annals of Finance, Springer, vol. 19(1), pages 23-62, March.
    13. Ying Yan, 1996. "Credit Rationing, Bankruptcy Cost, and Optimal Debt Contract for Small Business," Finance 9612003, University Library of Munich, Germany.
    14. Karel Janda, 2006. "Lender and Borrower as Principal and Agent," Working Papers IES 2006/24, Charles University Prague, Faculty of Social Sciences, Institute of Economic Studies, revised Jul 2006.
    15. Ian Ball & Deniz Kattwinkel, 2019. "Probabilistic Verification in Mechanism Design," Papers 1908.05556, arXiv.org, revised Jul 2024.
    16. Peter J. Simmons & Anna Maria C. Menichini, 2022. "Efficient audits by pooling independent projects: Separation vs. conglomeration," Discussion Papers 22/06, Department of Economics, University of York.
    17. Gui, Zhengqing & von Thadden, Ernst-Ludwig & Zhao, Xiaojian, 2019. "Incentive-compatibility, limited liability and costly liquidation in financial contracting," Games and Economic Behavior, Elsevier, vol. 118(C), pages 412-433.
    18. Koessler, Frederic, 2004. "Strategic knowledge sharing in Bayesian games," Games and Economic Behavior, Elsevier, vol. 48(2), pages 292-320, August.
    19. Persson, Petra, 2018. "Attention manipulation and information overload," Behavioural Public Policy, Cambridge University Press, vol. 2(1), pages 78-106, May.
    20. Eduardo Perez-Richet, 2014. "Interim Bayesian Persuasion: First Steps," American Economic Review, American Economic Association, vol. 104(5), pages 469-474, May.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ucp:jpolec:v:116:y:2008:i:6:p:1023-1057. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Journals Division (email available below). General contact details of provider: https://www.journals.uchicago.edu/JPE .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.