Documents de travail
Année
2025
Abstract
This paper aims to provide microeconomic and behavioral foundations for economic decoupling in the context of a resurgent risk of international conflict between two economically integrated superpowers. In our model, a potential aggressor may initiate military conflict, while the defender, anticipating this possibility, can implement a preemptive decoupling strategy to signal its readiness to resist aggression. We analyze the subgame perfect equilibrium of
this sequential game with perfect information and determine the optimal level of decoupling that ensures effective deterrence. Depending on the parameters, partial decoupling can lead to a “peace equilibrium.” However, results from an original laboratory experiment reveal that achieving this optimal level is challenging. Many defenders either completely avoid decoupling or engage in extreme decoupling – both of which undermine peace, as they incentivize
aggression from the attacker.
VRANCEANU, R. (2025). The Strategic Rationale for Economic Decoupling: Theory and Experimental Evidence. WP 2506, ESSEC Business School.