Credibility, Uncertainty, and Deterrence

Abstract

In this paper the connection between deterrence stability and threat credibility is examined conceptually and theoretically. We formulate as a model of bilateral deterrence a game of incomplete information in which each player is uncertain about its opponent's preferences should it unilaterally alter the status quo. Uncertainty about the preferences of one's opponent leads to uncertainty about the opponent's willingness to retaliate. By identifying the credibility of each player's retaliatory threat with the probability that a player prefers retaliation to capitulation, we maintain consistency with both the traditional strategic literature, where credibility usually means believability, and with game theory, where credibility is usually synonymous with sequential rationality (i.e., subgame perfect equilibrium). We analyze formally the strategic implications of this conception of credibility and thus explore the critical role played by uncertainty in deterrence. By explicitly modeling uncertainty, we are able to understand the role of threats in contributing to, or detracting from, the robustness of a deterrence relationship.