Offsetting Uncertainty: Reassurance with Two‐Sided Incomplete Information

Kyle Haynes,Brandon K. Yoder

doi:10.1111/ajps.12464

Abstract

AbstractConventional 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.

Highlights

Conventional models of bargaining and reassurance under incomplete information assume that actors’ behavioral signals are objectively cooperative or noncooperative
Our analysis focuses on a separating equilibrium that occurs under intermediate values of r, when S is most uncertain of R’s type
The prevailing intuition has been that the obstacles to credible signaling that operate under onesided uncertainty are compounded under mutual uncertainty, insofar as they would operate in both directions

Summary

Introduction

Conventional models of bargaining and reassurance under incomplete information assume that actors’ behavioral signals are objectively cooperative or noncooperative. 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. We argue that mutual uncertainty can provide strong incentives for actors to honestly reveal their true preferences, rather than misrepresenting them This enhances the credibility of behavioral signals and allows initially uncertain actors to accurately update their beliefs about each other’s intentions

Results

Discussion

Conclusion