Working Paper: NBER ID: w3399
Authors: Jonathan Eaton; Maxim Engers
Abstract: Sanctions are measures that one party (the sender) takes to influence the actions of another (the target). Sanctions, or the threat of sanctions, have been used, for example, by creditors to get a foreign sovereign to repay debt or by one government to influence the human rights, trade, or foreign policies of another government. Sanctions can harm the sender as well as the target. The credibility of such sanctions is thus at issue. We examine, in a game-theoretic framework, whether sanctions that harm both parties enable the sender to extract concessions. We find that they can, and that their thrust alone can suffice when they are contingent on the target's subsequent behavior. Even when sanctions are not used in equilibrium, however, how much compliance they can extract typically depends upon the coats that they would impose on each party.
Keywords: sanctions; game theory; international relations
JEL Codes: F51; F53
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| sanctions that are costly to both the sender and the target (F51) | alter the behavior of the target (Y60) |
| the sender's threat of sanctions (F51) | compliance from the target (Y20) |
| the effectiveness of these sanctions varies based on the costs they impose on both parties (F51) | effectiveness of sanctions (F51) |
| the mere threat of sanctions (F51) | influence the target's ongoing policies (E61) |
| contingent sanctions (P37) | more control over the target's actions (E61) |
| sanctions can be effective even if not enacted in equilibrium (D52) | effectiveness of sanctions (F51) |