Offsetting Uncertainty: Reassurance with Two‐Sided Incomplete Information

Abstract

Conventional models of bargaining and reassurance under incomplete information assume that actors' behavioral signals are objectively cooperative or noncooperative. Even if actors are uncertain of each other's preferences, they know what types of actions the other will view as cooperative. Yet on many real‐world issues, cooperation is subjective, and what constitutes a cooperative action is conditional on the receiver's preferences. We present a formal model showing that in these cases, two‐sided incomplete information actually incentivizes honest behavior and facilitates credible signaling. Because uncertain senders do not know whether a particular action will be interpreted as cooperative, they have little incentive to misrepresent, and instead honestly pursue their true goals. Thus, where cooperation is subjective, mutual uncertainty is “offsetting,” such that credible signals allow actors to quickly and accurately update their beliefs. We illustrate this logic through a case study of the Sino–Soviet split, and highlight the model's implications for contemporary U.S.–China relations.

Four Costly Signaling Mechanisms

“…Examples include the recent work on leader-specific reputation (e.g., Lupton 2018;McManus 2018;Wu and Wolford 2018), covert communication (e.g., Carson and Yarhi-Milo 2017;McManus and Yarhi-Milo 2017), alliance commitments (e.g., Fang, Johnson, and Leeds 2014), cyberwarfare (e.g., Gartzke and Lindsay 2017), and fait accompli (e.g., Altman 2017;Tarar 2016). Scholars have also applied costly signaling to better understand the conditions that sustain peace after civil wars (e.g., Hartzell and Hoddie 2007;Mattes and Savun 2009;Mattes and Vonnahme 2010; see also Reiter 2009), the implications of trade interdependence (e.g., Gartzke and Westerwinter 2016), the dynamics of trust and reassurance (e.g., Acharya and Ramsay 2013;Blankenship 2020;Chan 2012;Haynes and Yoder 2020;Kydd 2005;Kydd and McManus 2017), and the signaling functions of international institutions such as the International Monetary Fund and United Nations (e.g., Dai, Snidal, and Sampson 2017;Fang 2008;Simmons 2000;Tago and Ikeda 2015;Voeten 2005). Scholars have also applied costly signaling across the social sciences, from economics and sociology to anthropology and archaeology (reviewed in Bliege Bird and Smith 2005;Gambetta 2009;Quinn 2019;Riley 2001).…”

Causes and Consequences of Local Government Efforts to Reduce Risk and Adapt to Extreme Weather Events: Municipal Organizational Robustness

“…Conceptual reasons suggest that the gap between demand and supply will persist where institutional conditions and constraints negatively affect local government performance [17][18][19][20][21][22][23][24][25][26][27][28]. Hence, further research and evidence-based knowledge are required to understand how municipal institutional arrangements shape public infrastructure outcomes, and how improvements may trigger local government performance.…”

Signaling under the Security Dilemma: An Experimental Analysis

“…Kydd (2005, 201) states this conclusion emphatically: “cooperation is possible between [benign states] no matter how mistrustful they are to begin with …if they are genuine security seekers, [states] can find an appropriate set of costly signals that will enable them to reassure each other and cooperate completely over time” (emphasis in original). Recent work has extended Kydd’s insights to conditions of shifting power, which offensive realists have rightly pointed out pose additional barriers to credible signals (Haynes 2019; Yoder 2019a, 2019b; Haynes and Yoder 2020). This research demonstrates that reassurance remains theoretically feasible even under the most difficult conditions for credible signaling identified by offensive realists.…”