Why are the sanctions we observe weaker than the hypothetical average sanctions episode?
- When sanctions are most effective, we never observe them in practice—the target is so scared of sanctions that it acquiesces before they are imposed.
- Thus, the sanctions we observe in practice are typically weaker than the average hypothetical sanction.
- As a result, we cannot estimate the effectiveness of sanctions by looking at observed sanctions. This is because the aforementioned selection problem, i.e., an actor has strategically selected into being sanctioned and thereby disrupted our ability to make an inference based on observables.