The core economic issue is this: in the midst of a “chicken” game, which verbal cues should lead you to conclude that things are going well (poorly) for your side? … How about this? We make lots of noise, hoping to scare Iran. If the noise doesn’t work (which it won’t) then we might feel we must attack, having put our credibility on the line.
Barkley is less optimistic:
Tyler Cowin on Marginal Revolution has linked to this article and compared the whole thing to a game of chicken, arguing that maybe the US policymakers do not really want to bomb, but are semi-secretly trying to scare the Iranians into not doing anything. The problem is, as I have previously noted, that this looks very much like the pre-Iraq-war hubbub over WMD. Saddam had stopped their programs, but nobody in the US believed him because of his previous lying.
I’m even less optimistic for the following reason. We did play this game of chicken with Saddam and he blinked. We were not relying on his good word as part of this game was for Saddam to let the UN inspectors back in. When Saddam blinked, he was letting the inspectors do their job and they were not finding any WMDs. But then some madman in the White House decided on March 19, 2003 to start a war anyway. If that same madman is Commander-in-Chief, there is a bit of a flaw in Tyler’s theory.