A game theoretical analysis of economic sanction

Khalifany Ash Shidiqi and Rimawan Pradiptyo

MPRA Paper from University Library of Munich, Germany

Abstract: Economic sanction has been widely used and increasingly a popular tool in maintaining peace and political stability in the world. The use of economic sanction, as opposed to the use of military power, to punish target countries have been supported by the Charter of United Nations (UN). Tsebelis (1990) modelled economic sanctions using game theory and found that any attempt to increase the severity of the sanctions was counterintuitive, namely the policy reduced the likelihood of sender country(s) in enforcing economic sanction, however, it did not change the probability of the target country(s) in violating international agreement/law. This paper focuses on the refinement of the sanction game proposed by Tsebelis (1990) to analyse international relations. Recent findings from various studies on the effectiveness of economic sanction have been used to reconstruct the game. In contrast to Tsebelis’(1990) findings, any attempt to increase the severity of economic sanction may reduce the probability of the target country(s) in violating international agreement/law. A similar result was obtained in the case for which the sender country(s) applies any policy in preventing violation of international agreement/law by providing aids, assistances, and incentives to the target country.

Keywords: Economic Sanction; the Sanction/Inspection Games; Mixed Strategy Equilibrium (search for similar items in EconPapers)
JEL-codes: C72 F51 K42 (search for similar items in EconPapers)
Date: 2011-02-25
New Economics Papers: this item is included in nep-gth and nep-hpe
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