Outcomes and Audience Costs in an Incentivized Laboratory Experiment

This paper presents a laboratory experiment examining how citizens' concern for their country's international reputation affects how they evaluate leaders. A large experimental literature has found that citizens are less supportive of leaders that escalate a crisis and then back down than leaders that never entered the crisis at all. These audience costs emerge despite the policy outcome being the same in both cases. Previous research suggests that citizens dislike inconsistency from a leader and worry about the country's international reputation. This paper argues that the reputation mechanism behind audience costs has not been adequately examined. Therefore, I present a bargaining game that can escalate to war. I then test this game under conditions when reputations can emerge and when they cannot in the context of a laboratory experiment. The results of the laboratory experiment show that audience costs do not emerge, even when reputational concerns are possible, and that citizens care more about the policy outcome than about the policy-making process. Thus, I connect the literature on retrospective voting with the literature on how citizens evaluate the foreign policy of leaders.