Modeling threats and promises: Explaining the Munich crisis of 1938

The use of an incomplete information game model to explore the strategic characteristics of the carrot and stick approach to coercive diplomacy shows that the dynamics of this manipulative bargaining tactic are much more nuanced than standard atheoretical accounts suggest. One unexpected finding is that when information is incomplete, there always exists a deterrence equilibrium under which no attempt is made to overturn the status quo. An all-out conflict or an unsuccessful fait accompli is also possible, but only when information about preferences is not common knowledge. Incomplete information, then, is a double-edged sword, sometimes enhancing the prospects for peace and at other times making conflict more likely. We use a special case of the Carrot and Stick Game model to shed theoretical light on the Munich crisis of 1938, a manufactured crisis if there ever was one. Hitler’s last-minute about-face was motivated by his newfound belief that the British, French, and Czechs intended to resist his planned military invasion of the Sudetenland and his preference to avoid an all-out war. While his preference was unchanged in 1939, his beliefs were not; as our model suggests, the consequences were more than predictable.