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When does Disinformation Promote Successful Treaties

  • Ana Espinola-Arredondo
  • Felix Munoz-Garcia

    ()

    (School of Economic Sciences, Washington State University)

This paper analyzes the negotiation of a non-binding treaty where agents are uninformed about each others?ability to comply with the terms of the agreement. We show that the presence of incomplete information allows the treaty to become successful under larger set of parameter conditions than under complete information. The paper also examines the welfare properties of our equilibrium results, showing a welfare improvement relative to complete information under certain conditions. Finally, we extend our analysis to settings where countries?types are correlated, ?nding that the equilibrium outcome where information is conveyed can be supported under larger conditions, whereas equilibria where information is concealed are sustained under a more restrictive set of parameter values.

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File URL: http://faculty.ses.wsu.edu/WorkingPapers/Munoz/WP2011-11.pdf
File Function: First version, 2011
Download Restriction: no

Paper provided by School of Economic Sciences, Washington State University in its series Working Papers with number 2011-11.

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Length: 31 pages
Date of creation:
Date of revision:
Handle: RePEc:wsu:wpaper:munoz-11
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Web page: http://faculty.ses.wsu.edu/

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  1. Downs, George W. & Rocke, David M. & Barsoom, Peter N., 1996. "Is the good news about compliance good news about cooperation?," International Organization, Cambridge University Press, vol. 50(03), pages 379-406, June.
  2. MARTIN, Alberto & VERGOTE, Wouter, 2007. "On the role of retaliation in trade agreements," CORE Discussion Papers 2007089, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  3. Whalley, John, 1991. "The Interface between Environmental and Trade Policies," Economic Journal, Royal Economic Society, vol. 101(405), pages 180-89, March.
  4. Kyle Bagwell, 2009. "Self-Enforcing Trade Agreements and Private Information," NBER Working Papers 14812, National Bureau of Economic Research, Inc.
  5. Ulph, Alistair (ed.), 2001. "Environmental Policy, International Agreements, and International Trade," OUP Catalogue, Oxford University Press, number 9780198293293, March.
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