Bargaining in the Shadow of Power

Part I. The Puzzle of Dyadic
Interaction
A. Why do some pairs of states have dramatically different relationships?
Conflict
Hostile statements
Hostile nonviolent actions
Use, threat, display of force
War
Vs.
Positive statements
Diplomatic recognition
Intercultural exchanges
Alliances
Trade
Aid

•
•
•
US-Iraq 1987: US forgives Iraqi attack on
USS Stark , aids Iraq
US-Iran 1987: US destroys Iranian oil platforms, ships
Iran-Iraq 1987: Bloody war continues


US-Iraq 2003: War

US-Iran 2003: No War

Iran-Iraq 2003: No War

Why the differences? No single state has become more or less warlike….but the dyads have!

C. Forms of Cooperation
1.
Between Cooperation and Conflict: Bargaining a. Formal Bargaining:
Treaties, etc.
b. Tacit Bargaining:
Reciprocal Action c. Arbitration: Third-party resolution d. Mediation: Third-party support

2. Alliances: Only 25% reliable at first glance….
War occurs… Allied
Not
Allied
Intervene,
YES
25% 2%
Intervene,
NO
75% 98%

From Leeds, Long, and Mitchell (2000):

…but examining the fine print reveals a different story!

Example: Mutual Tariff Reduction

1.
2.
War – Standard definition is 1000 battledeaths
Militarized Interstate Disputes (MIDs) – use, threat, or display of force

E. Are Conflict and Cooperation
Opposites?
1. The Continuum View


Are these mutually exclusive with the conflict list?

3. Sometimes Conflict and
Cooperation Co-Exist

Part II. The Spiral to War
Interaction
Salience
Issues
Conflict-
Producing
Factors
Cooperation-
Producing
Factors
A Model of Dyadic Interaction
Bargaining
Conflict
Cooperation
Outcomes

Part II. The Spiral to War
Interaction
Salience
Issues
Conflict-
Producing
Factors
Bargaining
Conflict
Cooperation
A Model of Dyadic Interaction

1.
Interaction a. Ability to communicate b. Ability to act
Interaction

i.
c. Measures of
Interaction
Contiguity – Countries that border each other (or narrow body of water)
(Countries surrounded by blue are contiguous to
Red) 
Interaction

Interaction

State-level finding: Major powers do more of everything – conflict and cooperation

Result = Dyadic effect: If at least one dyad member is major power, increased levels of cooperation and conflict

iii. Politically-Relevant International
Environments (PRIE), 1816-2001
Criteria
All Dyads
Dyad-
Years
% of
Dyad-
Years
% of
Wars
% of
MIDs
675,015 100% 100% 100%
Land Contiguity 19,723 2.9% 65.9% 50.3%
Land/Sea Contiguity 32,881 4.9% 75.8% 63.7%
Either is major power 71,770 10.6% 51.6% 45.8%
PRIE (Any of these) 86,393 12.8% 94.5% 85.2%

2.
Issue Salience a. Priority relative to other concerns b. Determines amount of power applied c. Low salience = inaction
Interaction
Salience
Issues

B. What leads to dyadic conflict?
Conflict-
Producing
Factors

1. Opportunity: Contiguity and
Proximity
Conflict-
Producing
Factors

Proximity: Loss of Strength
Gradient
Resources that can be applied to a conflict decay at distance
Wealthy/Advanced
State
Shift in gradient due to technology or development Poor State
Conflict-
Producing
Factors

Conflict-
Producing
Factors a. Disparity =
Peace b. Parity = War
Risk

Conflict-
Producing
Factors

Conflict-
Producing
Factors

a.
b.
Repeated disputes  Future disputes
Easier for diversionary war
Conflict-
Producing
Factors

i.
ii.
iii.
Conflict-
Producing
Factors
Rivals fight more wars – or do states likely to fight become rivals?
Repeated crises  Use of more aggressive bargaining strategies
Rivals use more forceful strategies – against non-rivals!

a.
b.
Rivalry + Arms
Race = Risk of
War?
Most arms races difficult to demonstrate:
Conflict-
Producing
Factors

Can You Pick Out the 3 Arms Races?
Canada-Mexico US-USSR Israel-Syria
Australia-NZ India-Pakistan
Belgium-
Netherlands

Part III. Pathways to Peace
Interaction
Salience
Issues
Conflict-
Producing
Factors
Cooperation-
Producing
Factors
A Model of Dyadic Interaction
Bargaining
Conflict
Cooperation
Outcomes

Part III. Pathways to Peace
Cooperation-
Producing
Factors
A Model of Dyadic Interaction
Bargaining
Conflict
Cooperation

Cooperation-
A. What Leads to Cooperation?
Producing
Factors

Cooperation-
Producing
Factors a.
Effects of Joint Democracy: i.
The “Democratic Peace:” Virtually no wars between democracies
• Alleged Exceptions: US-UK 1812 (UK not democracy), UK-Germany
WW1 (Germany not democracy), Finland-UK WW2 (no real combat), Peru-Ecuador (few casualties), India-Pakistan (civilians left out of the loop) ii. Fewer MIDs (1/3 to 2/3 reduction)
• Shift to covert from overt when force is used
• MIDs less likely to escalate to higher levels of violence
• Increased reliance on mediation, arbitration iii. Increased common interests (alliances, UN votes, IOs, etc) iv. Increased Trade – Why should this be?

Cooperation-
Producing
Factors

Cooperation-
Producing
Factors

Cooperation-
Producing
Factors

Cooperation-
Producing
Factors

Power Transition Theory:
Mutual Satisfaction = Peace
Side A
Satisfied
Side B
Satisfied
Outcome
Peace
Satisfied Dissatisfied Conflict
Dissatisfied Dissatisfied Peace or
Intense Conflict

Evidence for Peace Through
Shared Interests
Cooperation-
Producing
Factors

Alliance portfolios:
Similarity generally reduces conflict
– Better predictor than dyadic alliance!

UN Votes: Similar votes = closer economic ties

Cooperation-
Producing
Factors

Even after controlling for democracy / autocracy, similar government mechanisms
(executive-legislative relations, etc) increase cooperation / reduce conflict.

Joint advanced economies trade, cooperate, ally more / fight less with each other than other dyads

5. Economic Interdependence a.
Mutual gains from trade i. Short explanation: Trade is voluntary ii. Absolute and Comparative Advantage
Cooperation-
Producing
Factors

Absolute
Advantage
Given 100 resources, what can each country produce?
Missiles
20
10
USA Colombia
Missiles
OR
Coffee
20 5
10 200
•Production possibilities without trade
•Trade allows specialization. US buys
Coffee at < 10 resources. Colombia buys Missiles at < 20 resources.
•Example: Coffee = 1, Missiles = 10.
US trades 5 missiles (50 resources) for
50 coffee (50 resources)
10
100
Coffee
200
•Result: Both sides can achieve levels of consumption outside of the original production possibilities!

Comparative
Advantage
Given 100 resources, what can each country produce?
Wheat
100
50
5
Cars
USA Britain
Wheat
OR
100
Cars 10
20
5
10
•US has absolute advantage in both goods –
5 to 1 in wheat, 2 to 1 in cars -- so has
comparative advantage (bigger relative advantage) in wheat
•UK has comparative advantage (smaller relative disadvantage) in cars (½ as productive rather than 20% as productive)
•UK buys wheat at < 5 resources,
US buys cars at < 10 resources
•Example: Wheat = 1.5, Cars = 9. US sells
24 wheat (36 resources), buys 4 cars (36 resources)

a.
b.
5. Economic Interdependence
Mutual gains from trade i. Short explanation: Trade is voluntary ii. Absolute and Comparative Advantage
Reinforces democratic peace:
Cooperation-
Producing
Factors

a.
b.
c.
5. Economic Interdependence
Cooperation-
Producing
Factors
Mutual gains from trade i. Short explanation: Trade is voluntary ii. Absolute and Comparative Advantage
Reinforces democratic peace
Allies trade more than enemies…but sometimes trade continues during war!

Part IV. Winners and Losers:
Predicting Outcomes
Interaction
Salience
Issues
Conflict-
Producing
Factors
Cooperation-
Producing
Factors
A Model of Dyadic Interaction
Bargaining
Conflict
Cooperation
Outcomes

Part IV. Winners and Losers:
Predicting Outcomes
Bargaining
Conflict
Cooperation
Outcomes
A Model of Dyadic Interaction

A. The Logic of Game Theory
Bargaining
Conflict
Cooperation
1. Game theory = formal way to represent strategic interaction

2. Assumptions of Game
Theory
Bargaining
Conflict
Cooperation a.
Rational choice, unrestricted preferences i. Connected preferences – Some outcomes preferred over others utility) by the player (subjective ii. Transitive preferences – If a player prefers outcome A to outcome B, and also prefers outcome B to outcome C, then the player must prefer outcome A to outcome C. iii. Choice – Pick the option believed to lead to preferred outcome

i.
ii.
iii.
iv.
b. Elements of a game
Bargaining
Conflict
Cooperation
Players – In IR, this means states
Strategies – The choices players have
Outcomes – The results of the players’ choices
Payoffs – How much each player values each Outcome
Player 2
Strategy A
Player
1
Strategy
A
Strategy
B
Outcome 1
Player 1 Payoff,
Player 2 Payoff
Outcome 3
Player 1 Payoff,
Player 2 Payoff
Strategy B
Outcome 2
Player 1 Payoff,
Player 2 Payoff
Outcome 4
Player 1 Payoff,
Player 2 Payoff

Bargaining
Conflict
Cooperation




Realism: Power and security (relative gains concerns)
Liberalism: “There’s no accounting for taste” – but money often used (emphasis on absolute gains)
Radicalism: Distribution of wealth (relative economic gains) key
Constructivism: Skeptical of rationalism, but payoffs socially constructed, just like the game.

3. Making Predictions:
Solving a Game
Bargaining
Conflict
Cooperation a.
b.
Goal = Find an equilibrium (stable behavior, unlikely to change without change in conditions)
Basic tool = Nash Equilibrium  Neither player could do any better by unilaterally changing its strategy choice
Player 2

How to solve a simple 2x2 game 
Strategy A Strategy B
Player
1
Strategy
A
Strategy
B
2,3
0,0
3,4
4,2

c. Limitation: No
Equilibrium
Bargaining
Conflict
Cooperation

Not every game has a Nash Equilibrium. Prediction = no stable pure strategy, stability only results from “mixing” strategies (probabilistic prediction)
Example:
Player 2
Strategy A Strategy B
Player
1
Strategy
A
Strategy
B
2,3
0, 5
3,4
4,2

d. Limitation: Multiple
Equilibria
Some games have multiple Nash Equilibria.
Prediction = either equilibrium can result
Bargaining
Conflict
Cooperation

Example:
Player
1
Strategy
A
Strategy
B
Player 2
Strategy A Strategy B
2,5
0,4
3,4
4,5

a.
b.
4. Games Nations Play
Bargaining
Conflict
Cooperation
Prisoners’ Dilemma: Used to model “Security
Dilemmas” -- Efforts to increase own security make others less secure (arms races, etc.)
Both players end up worse, even though each plays rationally!
Player 2
Remain Silent Confess
Player
1
Remain
Silent
Misdemeanor,
Misdemeanor
Life, Walk Free
Confess Walk Free, Life Felony, Felony

Bargaining
Conflict
Cooperation b. Chicken i.
Equilibria: Someone swerves – but who?
ii.
Used to model nuclear crises iii.
Credible commitment – throw away the steering wheel!
Player 2
Swerve Drive Straight
Player
1
Swerve
Drive
Straight
Status Quo,
Status Quo
Cool, Wimp
Wimp, Cool
DEAD, DEAD

Bargaining
Conflict
Cooperation c. “Battle of the Sexes” i.
Equilibria: Both do better than nothing, but someone benefits more ii.
Used to model environmental cooperation, border demarcation, etc.
iii.
Incentive to deceive – Convince other player you would prefer no agreement to getting your way
Player 2
Tearjerker Action
Player
1
Tearjerker
Action
2, 1
0,0
0,0
1, 2

a.
b.
c.
5. Is There Hope for Cooperation in a Rationalist World?
Bargaining
Conflict
Cooperation
Realists and some Radicals argue that Prisoners’
Dilemma (PD) represents the international system
 “Tragedy of (Great Power) Politics” or “class war” i. BUT: Tournament of Strategies showed that when playing repeated PD the best strategy is not “Always
Defect” – it’s “Tit-for-Tat!” ii. Tit-for-Tat = Cooperate, then Reciprocate: Allows cooperation even in the most hostile circumstances BUT also risks escalation
Liberalism argues that few interactions are true PDs and that those that are should be approached with
TFT
Social Constructivism argues that people create these structures, so they can transform them

Bargaining
Conflict
Cooperation a.
b.
Anarchy need not  war. Cooperation can evolve even in a world full of PD players!
Institutions and “tying hands” can allow credible commitment, allowing cooperation.
Cooperative “win-win” strategies (maximize joint payoffs) include: i.
Commit to silence in PD (join a gang that punishes squealers) ii. Commit to “no play” in Chicken iii. Commit to take turns in Battle of the Sexes, PD, or
Chicken

c.
d.
a.
b.
Bargaining
Conflict
Cooperation
Does not independently account for preferences – intuition and other theories do a lot of “work” for game theory
Realistic games tend to have an infinite number of possible Nash Equilibria  limitations on predictive power
Assumes structure of game is “fixed”
Assumes common knowledge of rationality
– may be problematic (Princess Bride)

B. Empirical Outcomes of
Dyadic Bargaining
Outcomes
1.
Who gets more?
a. More power b. Cost Tolerance: Willing to take losses c. Salience ● Power predicts better than Power alone d. “Tied Hands” and Costly Signals: Ability to convince opponent that further concessions are impossible / unacceptable
2.
Will bargaining fail?
a. Zones of Agreement: Area of mutually acceptable outcomes (better than no agreement – which often means war -- for both sides) b. Expected costs of failure: What happens if there is no agreement?
c. “Shadow of the Future” – Bargaining over future bargaining power (i.e. territory) is most difficult

a.
b.
Economic conflict (tariffs)  increased political conflict (and vice versa)
Dyadic war is rare and getting rarer: i. 197 sovereign states  19,306 dyads.
Formula = [n(n-1)]/2 ii. Nearly 1 million “dyad-years” over the past two centuries iii. Less than 1 war per 1,000 opportunities since 1816. 2004-2012 = only 1 interstate war-year out of more than
150,000 dyad-years (Russia vs. Georgia)
Outcomes

Outcomes i.
Total victory uncommon (2/3 end by negotiation) ii. 59% of wars won by initially stronger side -- BUT: initiators of wars victorious 68% of the time, yet only stronger 59% of the time iii. Implication: “Which side started it?” better predicts victory than military power, though advantage declines over time iv. Extension: Democracies win more often, though advantage declines over time (they lose long wars)

3. Outcomes of
Cooperation
Outcomes a.
b.
c.
Some evidence that political cooperation
 economic cooperation (US/USSR)
Mediation and Arbitration appear unreliable BUT selection bias probably responsible (they get the tough cases)
Foreign aid  increases dyadic trade gains  increased interdependence

Interaction
Salience
Issues
Conflict-
Producing
Factors
Cooperation-
Producing
Factors
Bargaining
Conflict
Cooperation
Outcomes


Will nuclear weapons save us from war?

1. Ancient Greece:
The Melian
Dialogue
Melians: It may be your interest to be our masters, but how can it be ours to be your slaves?
“The strong do what they will and the weak do what they must.”
Athenians: To you the gain will be that by submission you will avert the worst; and we shall be all the richer for your preservation.
Athens demands submission by
Melians, even though
Melos is insignificant
Melians: But must we be your enemies?
Will you not receive us as friends if we are neutral and remain at peace with you?
Why fight a war over something so small?
Athenians: No, your enmity is not half so mischievous to us as your friendship; for the one is in the eyes of our subjects an argument of our power, the other of our weakness.


Jewish revolt against
Rome

Last 1000 holdouts on fortress of Masada


Jewish revolt against
Rome

Last 1000 holdouts on fortress of Masada

Rome imports 15,000 laborers from around empire, spends a year building ramp

Why?



3. 1919-1938: Intra-War
Deterrence Fails
Giulio Douhet: Opening hours of any major war  destruction of cities with explosives, gas, incendiaries  panic and social collapse
– 1922, 1932-4: Attempts to ban bombers
Despite fear of bombers, Britain actually initiated city warfare in
World War II!
– Deterrence failed…
– Mass killing / city destruction generally didn’t have the expected effect on civilian morale

1.
2.
3.
4.
5.
Massive Retaliation:
Depended on atomic superiority
Mutually-Assured
Destruction: “Tripwires”
Flexible Response:
Credibility at every level
Proportional Deterrence:
Enter the French….
Warfighting: Soviet and
US Hard-liners’ doctrine

1.
2.
3.
4.
5.
Clarity: Threat must be understood
Failures: Soviet “dead hand,” Iraqi invasion of Kuwait
Credibility: Opponent must believe threat will be carried out if line is crossed
Failures: Nuclear threats over Berlin Wall, Vietnam
Cost: Threat must be great enough to outweigh benefits of crossing the line
Failures: Sanctions on China, Chemical weapons in Iran-Iraq war
Restraint: Opponent must believe threat will NOT be carried out if line is NOT crossed
Failures: WMD Inspections before current Iraq conflict, Hitler declares war on America
Rationality: Opponent must weigh costs and benefits
Possible failures: Paraguayan War, Nuclear war termination

No [adequate] attention has been paid to a proposal, extremely important from the military and political point of view, to create a fully automated retaliatory strike system that would be activated from the top command levels in a moment of a crisis.
-- Soviet Central Committee, 1985







Underground command post
If communications fail AND nuclear explosions detected by sensors…
Rocket is launched with internal radio
Radio broadcasts launch orders / codes to Soviet
ICBMs
Thus, even if all Soviet leaders killed and communications disrupted, Soviet missiles will annihilate the USA
Problem: They didn’t TELL us about it!


All evidence suggests that Saddam did not expect opposition from the US – misinterpreted generic statement that US doesn’t take a position on the border disputes of other nations as permission to invade

1.
2.
3.
4.
5.
Clarity: Threat must be understood
Failures: Soviet “dead hand,” Iraqi invasion of Kuwait
Credibility: Opponent must believe threat will be carried out if line is crossed
Failures: Nuclear threats over Berlin Wall, Vietnam
Cost: Threat must be great enough to outweigh benefits of crossing the line
Failures: Sanctions on China, Chemical weapons in Iran-Iraq war
Restraint: Opponent must believe threat will NOT be carried out if line is NOT crossed
Failures: WMD Inspections before current Iraq conflict, Hitler declares war on America
Rationality: Opponent must weigh costs and benefits
Possible failures: Paraguayan War, Nuclear war termination

Year Issue
1945 Iran
Threat
Truman: “We're going to drop it on you.”
1955 Quemoy/
Matsu
1961 Berlin
Eisenhower: “Atomic bombs can be used... as you would use a bullet.”
Kennedy: “One chance in five of a nuclear exchange”
1969 Vietnam Kissinger: “USA will take measures of the gravest consequence.”
US Nuclear
Position
Result
Monopoly USSR
Withdraws
Dominance PRC ceases shelling
Superiority Draw – USSR builds Wall
Advantage No Effect

1.
2.
3.
4.
5.
Clarity: Threat must be understood
Failures: Soviet “dead hand,” Iraqi invasion of Kuwait
Credibility: Opponent must believe threat will be carried out if line is crossed
Failures: Nuclear threats over Berlin Wall, Vietnam
Cost: Threat must be great enough to outweigh benefits of crossing the line
Failures: Sanctions on China, Chemical weapons in Iran-Iraq war
Restraint: Opponent must believe threat will NOT be carried out if line is NOT crossed
Failures: WMD Inspections before current Iraq conflict, Hitler declares war on America
Rationality: Opponent must weigh costs and benefits
Possible failures: Paraguayan War, Nuclear war termination




US Demand: Stop anti-democracy crackdown (i.e. Don’t preserve Communist government authority)
Sanctions:
– Ban on arms sales
– Ban on direct high-level military contacts
– Ban on some government financing
– suspension of export licenses for satellites contracted to be launched in China
– suspension of export licenses for crime control and detection instruments and equipment
– denial of export licenses for any goods or technology used in nuclear production, if the President finds that such products could be diverted to the research or development of a nuclear explosive device
Outcome: China ignores sanctions, most of which are lifted within a year or two

Iraq Violates the Geneva Protocol,
1982-1983

Iran-Iraq war is intense and bloody

Iraq begins using tear gas, then blister agents, then nerve gas

West is silent because Iran is considered the greater threat

Iran retaliates, but lacked enough chemical weapons to do serious damage

1.
2.
3.
4.
5.
Clarity: Threat must be understood
Failures: Soviet “dead hand,” Iraqi invasion of Kuwait
Credibility: Opponent must believe threat will be carried out if line is crossed
Failures: Nuclear threats over Berlin Wall, Vietnam
Cost: Threat must be great enough to outweigh benefits of crossing the line
Failures: Sanctions on China, Chemical weapons in Iran-Iraq war
Restraint: Opponent must believe threat will NOT be carried out if line is NOT crossed
Failures: WMD Inspections before current Iraq conflict, Hitler declares war on America
Rationality: Opponent must weigh costs and benefits
Possible failures: Paraguayan War, Nuclear war termination

1.
2.
3.
4.
General Deterrence: You won’t dare attack me because you know I’m armed and ready
Immediate Deterrence: I’m warning you right now – attack and I’ll shoot!
Extended Deterrence: Don’t attack my friend either -- or I’ll shoot
Existential Deterrence: I don’t have a gun but I could go buy one if needed

1.
2.
3.
Security Dilemma: Increased costs and credibility also mean decreased restraint
Vulnerability Dilemma: If you don’t attempt to counter deterrent threat, maybe you intend to strike first… (Soviet silos)
Rational Irrationality: Fait accompli
Rationality decreases credibility, but irrationality decreases restraint and “The threat that leaves something to chance:”

1.
2.
3.
Inherent uncertainty: If opponent does nothing, is deterrence working?
General deterrence creates bias: unstated threats may deter. Perhaps having to state a threat means it is unlikely to succeed…
Some evidence supports extended immediate deterrence


Do IGOs promote dyadic peace?

Do alliances create peace between dyads, or do they raise the specter of war?

What bargaining strategy best avoids war and produces cooperation?

A. Do Joint IGOs produce dyadic peace?

A. Do Joint IGOs produce dyadic peace?
1. Unexplained finding: Same IGOs = increased war risk
2. Possible reasons a. Coincidence (IGOs not associated with war) b. Similar interests (IGOs and war have common causes) c. Interaction (IGOs cause war) d. Levels of Analysis (Improperly Aggregating to System Level) e. Differences between IGOs (Let’s study this more) i.
Universal: No effect ii.
Limited-purpose: Depends
– Regional Political or Social = Increased war risk
– Regional Military or Economic = Decreased war risk
3. Another puzzle: Same IGOs = decreased MIDs!

4. IGOs can produce convergence

1.
2.
Statistical evidence: disputed. After controlling for contiguity, alliances seem to make war less likely between the allies
Why might allies be more likely to fight each other ?

Alliances and
Preferences
Allies: Nowhere to go but down
Nonaligned: Equal chance of increased conflict and increased cooperation
Rivals: If not already fighting, nowhere to go but up

3. When have allies fought each other?

C. Which bargaining strategies promote peace?
1.
2.
Known hazards – Bully and Fight a. Bully: one OR both sides respond to concessions by increasing demands (i.e. appeasement fails) b. Fight: Reciprocal escalation (BOTH sides respond to conflict with higher level of conflict)
Appeasement also fails – Of six known cases in crises, five were diplomatic defeats for appeaser and one led to war

3. Reciprocity: A Strategy for
Cooperation?

Yes – But ALSO a recipe for conflict spirals!

D. The Fundamental Puzzle: Vicious
Circle or Virtuous Circle?

Most conflict-producing factors reinforce each other

Arms Races
Bully and
Fight
Strategies
Rivalry Crisis Escalation
Reduced
Trade
Conflict

D. The Fundamental Puzzle: Vicious
Circle or Virtuous Circle?

Most conflict-producing factors reinforce each other

So do most cooperation-producing factors

Advanced
Economies
Joint Democracy
Trade and
Interdependence
Alliances and
Agreements
Expectation of
Reciprocal
Concessions

D. The Fundamental Puzzle: Vicious
Circle or Virtuous Circle?

Most conflict-producing factors reinforce each other

So do most cooperation-producing factors

Which of these two feedback loops is more powerful in the long run?