Reputations for Resolve and Higher-Order Beliefs in Crisis Bargaining

Abstract

Reputations for resolve are said to be one of the few things worth fighting for, yet they remain inadequately understood. Discussions of reputation focus almost exclusively on first-order belief change—A stands firm, B updates its beliefs about A’s resolve. Such first-order reputational effects are important, but they are not the whole story. Higher-order beliefs—what A believes about B’s beliefs, and so on—matter a great deal as well. When A comes to believe that B is more resolved, this may decrease A’s resolve, and this in turn may increase B’s resolve, and so on. In other words, resolve is interdependent. We offer a framework for estimating higher-order effects, and find evidence of such reasoning in a survey experiment on quasi-elites. Our findings indicate both that states and leaders can develop potent reputations for resolve, and that higher-order beliefs are often responsible for a large proportion of these effects (40 percent to 70 percent in our experimental setting). We conclude by complementing the survey with qualitative evidence and laying the groundwork for future research.