Sanctions are measures that one party (the sender) takes to influence the
actions of another (the target). Sanctions, or the threat of sanctions, have
been used, for example, by creditors to get a foreign sovereign to repay debt
or by one government to influence the human rights, trade, or foreign policies
of another government. Sanctions can harm the sender as well as the target.
The credibility of such sanctions is thus at issue. We examine, in a
game-theoretic framework, whether sanctions that harm both parties enable the
sender to extract concessions. We find that they can, and that their thrust
alone can suffice when they are contingent on the target's subsequent
behavior. Even when sanctions are not used in equilibrium, however, how much
compliance they can extract typically depends upon the coats that they would
impose on each party.
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