WHY DO SANCTIONS NEED TIME TO WORK - ADJUSTMENT, LEARNING AND ANTICIPATION

Economists disagree on the influence of time on the probability of suc cess of economic sanctions. Some argue that it takes time to convince the sanction target. Others stress that economic adjustment will reduc e incentives to comply. We seek to reconcile these different literatur es, modelling the target's decision to comply as a function of both (a nticipatory) economic adjustment and Bayesian learning. We show that s anctions which do not work instantaneously (ie there is neither politi cal compliance nor economic adjustment) can work in the long run, but only if the learning effect dominates the adjustment effect. A suffici ent condition for ultimate compliance is that (potential) sanction dam age that cannot be avoided by adjustment in the long run exceeds the y ield of misconduct.