Doubling Down: The Dangers of Disclosing Secret Actions

With Jacob Otto.

Abstract: When an actor catches a state taking an objectionable secret action, it faces a dilemma. Exposing the action could force uncommitted states to terminate the behavior to save face. But it could also provoke committed states to escalate the activity now that others are aware of the infraction. We develop a model that captures this fundamental tradeoff. Three main results emerge. First, the state and its opponent may engage in a form of collusion—opponents do not expose committed states despite their distaste for the behavior. Second, when faced with uncertainty, the opponent may mistakenly expose a committed type and induce escalation, leading the opponent to have ex post regret. Finally, as the strength of secret action increases, states may engage in it less often. This counterintuitive result is a consequence of the opponent’s greater willingness to expose, which deters less committed types from bluffing.

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