Several of the assumptions underlying the model can be relaxed to make the model more realistic. Allowing one or both states to hold private information in this way obscures the opponent’s view of the exit cost-to-cost threshold relationship. This introduces the opportunity for states to bluff. If we relax the assumption that the value each state associates with the demand (vCh,vT) is public information. This information is key to the derivation of exit cost thresholds, A challenger may threaten economic exit even when its exit costs exceed its thresholds while the target’s do not. T may reject Ch ’s initial demand although it faces exit costs that exceed the T’s exit cost threshold. These strategies are plausible in a world of incomplete information regarding exit cost thresholds. With assumptions of complete information in place the model predicts that states will not incur economic exit except in situations where high-level conflict ensues. The logic is clear: if both states have complete information about the other state’s threshold levels, then they know a priori whether economic exit will be effective. If Ch knows that T faces exit costs that fall beneath its threshold, then it will only initiate a demand if it is prepared to escalate the conflict to high levels. In the real world, we do sometimes observe economic exit without high-level conflict (i.e., the U.S. grain embargo against U.S.S.R. in 1979). This behavior is off the equilibrium path in the exit model developed above; due either to errors by decision-makers in the real world or to an artifact of an assumption in the model that does not hold in all situations. This second explanation suggests that future research should begin with this generalization of the exit model to incorporate incomplete information in the economic relationship. unc.edu/~crescenz/research/cmps02.pdf
Posted on: Fri, 12 Jul 2013 22:13:20 +0000
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