SITE Seminar | Credible threats

Welcome to the first SITE Seminar of the fall! We kick off the semester on August 19, 2025, with a presentation by Martin Dufwenberg (Purdue University), who will share insights from the study “Credible Threats,” co-authored with Flora Li and Alec Smith. Drawing on a belief-dependent anger model and experimental evidence, the research shows how communicated threats influence expectations and behavior—leading to greater deterrence and increased costly punishment in strategic settings.

Start time: 2025-08-19 at 12:00

End time: 2025-08-19 at 13:00

Time zone: CEST

Location: At SSE and online via Zoom

Working paper: Credible Threats

By: Martin Dufwenberg, Flora Li, and Alec Smith

Abstract

We study the effect of communication on deterrence and costly punishment. We show that a theoretical model of belief-dependent anger captures the relationship between messages, beliefs, and behavior and implies that threats can generate credible commitments. We test our model in a between-subjects experiment with belief elicitation where one-sided communication is available as a treatment. The evidence supports the theory, demonstrating that communicated threats change beliefs and payoff expectations and lead to greater rates of costly punishment. Threats successfully deter co-players from exploiting the strategic environment to their advantage.

About the speaker

Martin Dufwenberg, Professor at the Mitch Daniels School of Business at Purdue University. Click "Expand" to learn more!

Martin is currently a visiting scholar at the University of Gothenburg. His research focuses on game theory and experiments, and the paper he’ll present, “Credible Threats” (co-authored with Flora Li and Alec Smith), explores “communicated” threats, which makes the analysis relevant to understand what e.g. Putin, Trump, Netanyahu and others are saying in order to achieve various objectives.

Learn more about the speaker >>