Why Economic Sanctions Rarely Signal Resolve

🔍 How the Model Tests Signaling

This study asks whether economic sanctions serve international signaling purposes. A fully structural statistical model that employs a signaling game as a statistical model is used to investigate whether sanctions produce credible signaling effects between states.

📊 Key Findings From the Estimation

• Estimation results suggest that sanctions fail to work as a costly, credible signal.
• The relative cheapness of sanctions prevents a target state from distinguishing a resolute sender from a sender who is bluffing.
• When sanctions are imposed, a target rarely updates its initial evaluation of the sender state’s resolve—much less frequently than when a military challenge is observed.

💡 Why It Matters

Because sanctions are typically not costly enough to separate types, they rarely alter target beliefs about resolve. This limits their effectiveness as a tool of coercion via signaling, with implications for models that treat sanctions primarily as communication devices and for policymakers who rely on sanctions to credibly convey threats or intentions.