Estimating signaling games in international relations: problems and solutions

Abstract

Signaling games are central to political science but often have multiple equilibria, leading to no definitive prediction. We demonstrate that these indeterminacies create substantial problems when fitting theory to data: they lead to ill-defined and discontinuous likelihoods even if the game generating the data has a unique equilibrium. In our experiments, currently used techniques frequently fail to uncover the parameters of the canonical crisis-signaling game, regardless of sample size and number of equilibria in the data generating process. We propose three estimators that remedy these problems, outperforming current best practices. We fit the signaling model to data on economic sanctions. Our solutions find a novel U-shaped relationship between audience costs and the propensity for leaders to threaten sanctions, which current best practices fail to uncover.

Detecting and Correcting for Separation in Strategic Choice Models

“…First, researchers should consider extending the BR framework even further into the empirical analysis of discrete choice games. For example, extensive-form signaling models are also common in EITM studies of international relations (e.g., Crisman-Cox and Gibilisco 2021). Extending the BR framework could be helpful for scholars interested in empirical models of strategic interactions.…”

Trade Rage: Audience Costs and International Trade

“… 5. Scholars have examined audience costs in the context of economic sanctions broadly (Hart 2000; Dorussen and Mo 2001; Krustev and Morgan 2011; Whang, McLean, and Kuberski 2013; Thomson 2016; Crisman-Cox and Gibilisco 2019) and regarding trade policy through treaty commitments (Chaudoin 2014). …”