in: Oxford Research Encyclopedia of Politics
Costly signaling offers a solution to many foreign policy dilemmas. Though most commonly studied in the context of the bargaining theory of war, signaling can also play an important role in nonzero-sum interactions such as those characterized by chicken (e.g., nuclear deterrence) and the prisoner's dilemma (e.g., tariff reductions). A rich game theoretic literature explains how actors can signal credibly in these situations. The most prominent strategies are sinking costs (actions that are costly ex ante) or tying hands (actions that are costly ex post). These strategies are theoretically elegant but have generated considerable controversy when studied empirically. One controversy concerns the existence of hand-tying domestic audience costs under different regime types. A second controversy involves the degree to which sinking costs increase or decrease the risk of war. These controversies speak to the inherent tension between theories of strategic interactions and measuring their outcomes in the foreign policy process, where some events are off the equilibrium path and thus unobserved.The limited availability of foreign policy data was a major hindrance in earlier empirical efforts. Even as the quality of this data has improved, focus has been on the outcomes of conflict (crisis onset, escalation to war, victory, defeat) rather than the strategy. This is problematic given that all crises are sequential in nature and understanding the action–reaction cycle is vital to illuminating patterns of war, capitulation, and settlement. The frontier of research in the signaling literature is in bridging this gap. The advent of big data and machine learning has enabled more systematic empirical analysis of strategic moves by various foreign policy actors, including signaling. Some researchers, such as Lindsay & Gartzke, are harnessing these new data and methods to explore the means of signaling. Other scholars are beginning to ask questions about the efficacy of public versus private signaling, the role of ambiguity, and dyadic versus multi-actor signaling. This new wave of research seeks to nudge signaling closer to the concerns of foreign policy practitioners.