Circumstances, Domestic Audiences, and Reputational Incentives in International Crisis Bargaining

We present a new theory of interstate crisis bargaining. A country’s resolve is a function of intrinsic qualities of the government and external circumstances, both of which are unknown by the domestic electorate and the foreign country. When domestic political debate reveals that circumstances favor the use of force, the government can extract better terms than if circumstances are revealed to be unfavorable. The revelation of circumstances, however, exacerbates reputational incentives. Because governments can no longer hide behind unknown circumstances, voters can better discern the government’s type from its actions, strengthening the incentives to appear resolved. The model bridges the gap between audience costs and its critiques, showing how domestic audiences punish leaders for inappropriate policies rather than empty threats. At the same time, it highlights how the prospects for peace are worse if uncertainty about the circumstances is removed, suggesting that greater transparency does not always promote peaceful outcomes.