Better weapons or better troops?

Many observers of Israel's defense resource allocation process believe that insufficient resources are devoted to troop quality, while excessive resources are devoted to weapon quality. In this paper, we offer a potential explanation for this phenomenon. In our example, officers seek to signal their ability through their budgeting choices. Signaling behavior, combined with the timing and informational structure of defense decision-making, results in a sub-optimal allocation of resources to training and troop quality.