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Talking to the hand: Bargaining, strategic interaction, and economic sanctions

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  • Morgan, T. Clifton
  • Kobayashi, Yoshiharu

Abstract

The dominant theoretical perspective guiding research on economic sanctions views sanctions as tools of bargaining. This implies that senders and targets are engaged in strategic interaction and that each is basing its decisions, in part, on its expectations regarding how its opponent will react. In this paper, we test a number of hypotheses derived from a game-theoretic model developed by Morgan and Miers (1999) that focus specifically on the bargaining processes in sanctions episodes. Our results provide no support for these hypotheses and seem to suggest that sanctions senders and targets are paying very little attention to each other, at least in a manner consistent with the theory. We conclude with a consideration of why this might be the case and with some speculation regarding what this means for future research into the processes of economic sanctions. In short, we believe our results indicate that a new theoretical paradigm, focusing on legal enforcement and economic adjustment at the micro level is in order.

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  • Morgan, T. Clifton & Kobayashi, Yoshiharu, 2021. "Talking to the hand: Bargaining, strategic interaction, and economic sanctions," European Economic Review, Elsevier, vol. 134(C).
    • Handle: RePEc:eee:eecrev:v:134:y:2021:i:c:s0014292121000386
    DOI: 10.1016/j.euroecorev.2021.103685
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    References listed on IDEAS

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    1. Kwon, Ohyun & Syropoulos, Constantinos & Yotov, Yoto, 2022. "The Extraterritorial Effects of Sanctions," School of Economics Working Paper Series 2022-3, LeBow College of Business, Drexel University.

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