Do States Really Sink Costs to Signal Resolve?

Abstract

Sinking costs to signal resolve has become a vital part of how the field of international relations (IR) understands crisis bargaining. The logic of a resolved state “burning money” to distinguish itself from an unresolved state is well established in theory. But do states choose to sink costs and burn money in practice? We address the question on two fronts. First, we collect and analyze the examples of sinking costs in the mainstream IR literature. We find almost no clear-cut cases of sunk-cost signals. Second, we argue that this is because states typically prefer other signaling strategies. Rather than burning money, states can expend those resources more constructively. In particular, states can invest in improving the probability of victory in war (“balance tilting”), or they can downpay the costs of war. We conclude that balance tilting and downpaying costs plausibly explain a great deal of state behavior in peacetime, in crises, and even in wartime.