When to Appease and When to Punish: Hitler, Putin, and Hamas

David Levine and Lee Ohanian

No 32280, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: Much has been written about deterrence, the process of committing to punish an adversary to prevent an attack. But in sufficiently rich environments where attacks evolve over time, formulating a strategy involves not only deterrence but also appeasement, the less costly process of not responding to an attack. This paper develops a model that integrates these two processes to analyze the equilibrium time paths of attacks, punishment, and appeasement. We study an environment in which a small attack is launched and can be followed by a larger attack. There are pooling and separating equilibria. The pooling equilibrium turns the common intuition that appeasement is a sign of weakness, inviting subsequent attacks, on its head, because appeasement is a sign of strength in the pooling case. In contrast, the separating equilibrium captures the common intuition that appeasement is a sign of weakness, but only because deterrence in this equilibrium fails. We interpret several episodes of aggression, appeasement, and deterrence: Neville Chamberlain's responses to Hitler, Putin's invasion of Ukraine, Israel's response to Hamas, Turkey's invasion of Cyprus, and Serbia's attacks in Kosovo.

JEL-codes: D0 D82 F0 (search for similar items in EconPapers)
Date: 2024-03
New Economics Papers: this item is included in nep-cis, nep-gth, nep-mic and nep-tra
Note: EFG
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