When does Disinformation Promote Successful Treaties

Ana Espinola-Arredondo and Felix Munoz-Garcia

No 2011-11, Working Papers from School of Economic Sciences, Washington State University

Abstract: This paper analyzes the negotiation of a non-binding treaty where agents are uninformed about each others?ability to comply with the terms of the agreement. We show that the presence of incomplete information allows the treaty to become successful under larger set of parameter conditions than under complete information. The paper also examines the welfare properties of our equilibrium results, showing a welfare improvement relative to complete information under certain conditions. Finally, we extend our analysis to settings where countries?types are correlated, ?nding that the equilibrium outcome where information is conveyed can be supported under larger conditions, whereas equilibria where information is concealed are sustained under a more restrictive set of parameter values.

Keywords: Signaling games; Information transmission; non-binding negotiations; Correlated types (search for similar items in EconPapers)
JEL-codes: C72 D62 Q28 (search for similar items in EconPapers)
Pages: 31 pages
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