Free-Riding and Costly Signaling in Coalition Defenses

• In Event: Advances in Bargaining Models of War

Abstract

A major issue in NATO is the low contribution to defense expenses from small alliance partners. We investigate an enduring puzzle in coalition arming: why free-riding in defense contribution is present in many alliances? We propose a novel explanation: free-riding can function as a costly signal to potential adversaries, therefore enhancing the deterrent effect of military alliances.

To this end, we study a bargaining game in which the defender and the protege in a military alliance sequentially choose to make contributions that influence their fighting capacities and signal the fighting resolve of the defender. We investigate the conditions under which the strong defender is willing to allow the protege to free-ride itself as a mechanism to signal its resolve and power, while the weak defender prefers not to over-contribute to avert the cost of military expenses.

This paper offers a new explanation that connects two well-studied forces in alliance politics—free riding and costly signaling, generating implications for understanding why a strong leading state should tolerate the under-contribution made by small nations in military alliances.

Authors

• Bradley C Smith, Vanderbilt University

• Haonan Dong, Vanderbilt University