Signaling Strength with Handicaps

• Author: Noam Reich
• Published date: 01 August 2022
• Date: 01 August 2022
• DOI: http://doi.org/10.1177/00220027221080121
• Subject Matter: Articles

Article

Journal of Conf‌lict Resolution

2022, Vol. 66(7-8) 1481–1513

© The Author(s) 2022

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DOI: 10.1177/00220027221080121

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Signaling Strength with

Handicaps

Noam Reich

1



Abstract

In the presence of incomplete information, strong states have an incentive to invest in

costly signals that can differentiate them from weaker states. I argue that states can

signal strength by handicapping themselves, deliberately reducing their combat ef-

fectiveness. In an ultimatum crisis bargaining model, I show that strong states can

reduce the risk of war by making themselves weaker without reducing their demands.

The key to this result is a comparative advantage that allows stronger types to f‌ight

more effectively with handicaps. This allows for an equilibrium where (1) stronger

states adopt larger handicaps, thereby revealing their strength to the receiver, (2) larger

handicaps are more likely to deter the receiver, and, (3) the positive risk of war

precludes weaker types from imitating handicap signals. The ability to reveal strength

peacefully has important ramif‌ications for theories of mutual optimism, war termi-

nation, and the relationship between parity and war incidence.

Keywords

bargaining, game theory, signaling, handicaps

Between June 25th and July 1st 1862, the Union army suffered a series of devastating

defeats during the Seven Days’Battles and was repulsed from Richmond. This setback

pushed a quick end to the war out of reach and prompted Lincoln to reevaluate his

policy on slavery. Initially,Lincoln had refrai ned from promoting emancipation fearing

that it would lead to the secession of the remaining Union slave states and alienate

1

Politics, Princeton University, Princeton, NJ, USA

Corresponding Author:

Noam Reich, Politics, Princeton University, 001 Fisher Hall, Princeton, NJ 08540, USA.

Email: noamg@princeton.edu

Unionists throughout the Confederacy (Foner 2011, 163, 210–211). Now faced with

the prospect of a longer and more uncertain war, Lincoln came to view emancipation

and the imposition of costs on the Confederate populace as a “military necessity”

(Foner 2011, 217). To that end Lincoln convened a cabinet meeting 3 weeks later in

which he proposed to issue the Emancipation proclamation and declare as forever free

any slave in Confederate-held territory. The sharp policy reversal left his cabinet

speechless (Foner 2011, 219; Guelzo 2005, 134).

In the ensuing cabinet debate great importance was attributed to the response of

Great Britain and France. Both sought to intervene on behalf of the Confederacy and

hadonlybeenheldatbaybyUnionthreats.

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Secretary of State Seward convinced

Lincoln that issuing the Proclamation risked inviting European intervention by

signaling weakness (Guelzo 2005,136–137). Since the Proclamation would only

apply to slaves in Confederate-held territory where the Union had no power to

enforce it, it would look like the US would be trying to instigate a slave uprising.

Seward warned Lincoln that, in light of the Union’s recent defeat, the Proclamation

would look like an act of desperation. Instead, he advised Lincoln to postpone until a

victory could convince foreign audiences that the Union was not acting out of panic.

Lincoln agreed and would not issue the Proclamation until after the Union victory at

Antietam.

The existing bargaining literature provides us with no means for understanding this

behavior. Stronger states can demand more at the bargaining table and are more likely to

deter a rival. Therefore, taking actions that would improve the Union’s chances of

defeating the Confederacy should have increased its chances of thwarting intervention.

Lincoln and Seward determined that emancipation would be perceived as an attempt to

sow civil unrest in the Confederacy, which would certainly benef‌it the Union. However,

they decided to hold off to avoid appearing vulnerable. Subsequent events suggest that

Lincoln was wise to heed Seward’s advice. In the Confederacy, news of the Procla-

mation was received ebulliently as a sign of Union weakness (Bashir 2015,19–20).

Similarly, British newspapers viewed the Proclamation cynically and lampooned it as

“Lincoln’s last card.”Though Antietam pushed Britain away from intervention,

Foreign Secretary Russell and Chancellor of the Exchequer Gladstone still responded to

the news of the Emancipation Proclamation with renewed calls for action.

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Why should

a country appear stronger by refraining from actions that were expected to weaken their

rivals?

In this article, I argue that Lincoln’s actions constituted a handicap.

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Originally

developed in theoretical biology, handicaps are signals of strength that require that a

country reduce their capacity to f‌ight or refrain from using it to its fullest extent. Though

countries who handicap themselves decrease their probability of winning a war, they

can signal conf‌idence in their ability to f‌ight even at reduced strength. If weaker states

are unwilling to incur the risks that handicapping poses, then strong states may use

handicaps to distinguish themselves and communicate strength. In the civil war case,

Lincoln and Seward were trying to convey their belief that the Union could defeat the

Confederacy. They understood that their military setbacks had shrouded their strength

1482 Journal of Conf‌lict Resolution 66(7-8)

in uncertainty and sought to reveal it by showing that they were willing to accept the

risk of forgoing emancipation and the unrest it could cause.

To explore the trade-offs presented by handicap signaling, I incorporate them into a

standard crisis bargaining game. In the model, a country with private information

regarding its strength makes a take-it-or-leave-it (TIOLI) offer and can choose whether

to simultaneously handicap itself. I show that handicaps can be used to signal strength

as long as they impose differential costs on signalers with different levels of strength.

Strong types need to be able to incur the risk of handicapping with relative ease. That is,

a strong type should still be to a win a conf‌lict handily despite being handicapped. On

the other hand, a weak type should not be able to imitate the handicap without having its

hope for victory plummet. The model demonstrates that when strong types are endowed

with such a signaling advantage, then they can use it to set themselves apart. Spe-

cif‌ically, stronger types will adopt larger handicaps, thereby enabling the receiver to

infer that a larger handicap implies a stronger signaler. In turn, the receiver is more

likely to back down in response to larger handicaps. Though handicaps can deter, the

receiver still f‌ights with some positive probability. This risk of f‌ighting while hand-

icapped prevents weaker types from imitating the signal.

This article’s main result shows that when the signaler can both handicap and

bargain, she can always reveal her type. Neither bargaining alone nor signaling without

bargaining can generate a similar result. Absent handicapping, the receiver can only

form beliefs about the signaler’s strength from the offers he receives. Because states

have incentives to misrepresent their private information, the receiver makes use of the

risk-reward trade-off to discourage bluff‌ing. By increasing the risk of war in response to

large demands, the receiver can deter weaker types from demanding more than they

would under complete information. However, the risk-reward trade-off fails for the

strongest types who the receiver would not want to f‌ight under any circumstance.

Absent handicap signaling, weaker types can take advantage of the receiver’s reticence

to f‌ight and bluff by issuing the same demand as the strongest types. Handicapping

f‌ixes this issue, with its differential signaling costs ensuring that each type adopts a

unique handicap signal while also preventing mimicry o f their demand by weaker

types.

These results contribute to a growing literature on costly signals of stre ngth. Though

Fey and Ramsay (2011) have shown that private information regarding strength is most

detrimental to countries’ability to reach a bargain, the signaling literature has largely

focused on signals of resolve (Green and Long 2020, 53). Instead, most of the work

studying how states convey strength has explored information revelation through

bargaining via the risk-reward trade-off (Dal Bόand Powell 2009;Fey and Ramsay

2007;Fey and Ramsay 2016;Slantchev and Tarar 2011).

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Green and Long (2020)

provide a notable exception, arguing that states can signal strength by making secret

military technology public. Wolton (2019) also provides an exception, studying the

diff‌iculties in signaling strength with sunk costs when the receiver can respond with a

TIOLI offer. Slantchev (2010) studies a model where the assumptions required for

handicap signaling are reversed and the Defender can impose a differentially higher

Reich 1483