2018, Midwest Political Science Association We estimate audience costs and examine their substantive effects on the evolution of interstate disputes by using an infinitely repeated and dynamic game of crisis escalation. Unlike past efforts, our approach estimates country-specific audience cost parameters without relying on proxy variables, such as democracy measures. Contrary to intuition, increases in a country's audience costs encourage it to initiate disputes in equilibrium because the costs serve as a commitment device during the subsequent crisis, incentivizing the country to stand firm and coercing its opponent to back down. Nonetheless, the results demonstrate that larger audience costs would result in more peace worldwide, as they also discourage potential opponents from initiating disputes. Beyond regime type, we find that a free press, provisions for executive appointment or removal, and historical rivalries are also important determinants of audience costs.
