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Incentives to Misrepresent, Incentives to Reveal, and Incentives to Conceal: Demonstrations of Private Information in International Bargaining
Unformatted Document Text:  Incentives to Misrepresent, Incentives to Reveal, and Incentives to Conceal: Demonstrations of Private Information in International Bargaining Olivier Henripin 1 Department of Political Science Northwestern University ## email not listed ## International Studies Association 2010 Conference New Orleans, LA, 19 February 2010 Work in progress. Please do not cite without author’s permission. Comments are welcome. Abstract This paper argues that the mainstream rationalist literature has too easily dismissed demonstration as a viable communication mechanism during international disputes. In the bargaining model developed herein, the uncertainty of one of the two disputants regarding its likelihood of victory in war can be dispelled by its rival through a costly demonstration of military capabilities before bargaining begins. The bargaining process is represented very simply as an ultimatum game in which the respective role of each disputant as the “challenger” or “defender” is determined randomly. Results show that asymmetric information persists only when the fully informed state is sufficiently confident that it will assume the role of the “defender” and when the military costs of demonstrating capabilities are sufficiently high. More generally, the results also suggest that the canonical understanding of the asymmetric information problem (Fearon 1995) should be amended. In a wide variety of circumstances, incentives to misrepresent do not account for the persistence of private information in conflict bargaining, which results more fundamentally from a complete lack of incentives to reveal private information. More precisely, in the model, a state with no bargaining power (or proposal power), or whose private information concerns only private values (i.e., its value for war) has no incentives at all to reveal this information. The explanatory importance of incentives to misrepresent reappears, however, when a state possesses some bargaining power and has private information about common values (i.e., its military capabilities), but only under the condition that demonstration is too costly or impracticable. 1 The author gratefully acknowledges support from the Social Sciences and Humanities Research Council of Canada (SSHRC) as well as the Department of Political Science and the Graduate School at Northwestern University, and would like to thank Anne Sartori for her thoughtful advice and numerous useful conversations.

Authors: Henripin, Olivier.
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Incentives to Misrepresent, Incentives to Reveal, and Incentives to Conceal: 
Demonstrations of Private Information in International Bargaining
Olivier Henripin
Department of Political Science
Northwestern University
International Studies Association 2010 Conference
New Orleans, LA, 19 February 2010
Work in progress.  Please do not cite without author’s permission.  Comments are welcome.
This paper argues that the mainstream rationalist literature has too easily dismissed 
demonstration as a viable communication mechanism during international disputes. 
In   the   bargaining   model   developed   herein,   the   uncertainty   of   one   of   the   two 
disputants regarding its  likelihood  of victory in war can be dispelled by its  rival 
through a costly demonstration of military capabilities before bargaining begins.  The 
bargaining process is represented very simply as an ultimatum game in which the 
respective role of each disputant as the “challenger”  or “defender” is determined 
randomly.   Results show that asymmetric information persists only when the fully 
informed state is sufficiently confident that it will assume the role of the “defender” 
and when the military costs of demonstrating capabilities are sufficiently high.  More 
generally, the results also suggest that the canonical understanding of the asymmetric 
information   problem   (Fearon   1995)   should   be   amended.     In   a   wide   variety   of 
circumstances, incentives to misrepresent do not account for the persistence of private 
information   in   conflict   bargaining,   which   results   more   fundamentally   from   a 
complete lack of incentives to reveal private information.   More precisely, in the 
model,   a   state   with   no   bargaining   power   (or   proposal   power),   or   whose   private 
information concerns only private values (i.e., its value for war) has no incentives at 
all   to   reveal   this   information.     The   explanatory   importance   of   incentives   to 
misrepresent reappears, however, when a state possesses some bargaining power and 
has private information about common values (i.e., its military capabilities), but only 
under the condition that demonstration is too costly or impracticable.  
 The author gratefully acknowledges support from the Social Sciences and Humanities Research Council of Canada 
(SSHRC) as well as the Department of Political Science and the Graduate School at Northwestern University, and 
would like to thank Anne Sartori for her thoughtful advice and numerous useful conversations.  

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