Bargaining and Conflict

Introduction

Overview

• Earlier this term: perhaps war is in our genes?
• Today: could two rational, unitary actors fight?
  • The rationalist puzzle of war
  • Three mechanisms for war
  • Credible threats
• Next week: relax the unitary actor assumption

Today’s puzzle

Why are sanctions typically unsuccessful in producing compliance with demands (substantial concessions by target only in 20-30% of cases)?

1 The Rationalist Puzzle of War

1.1 The Puzzle

• War is an inefficient way of settling disputes. War always appears inefficient ex post.
• Why, then, does it recur? I.e., why does it not always seem inefficient ex ante?
• Why would two rational actors fight?

Notes

• What prevents states in a dispute from reaching an ex ante agreement that avoids the costs they expect will be paid ex post if they go to war.

• Note that the same puzzle arises in the context of:
  • Civil court trials. In fact, most civil disputes are settled out of court
    • Both sides can predict reasonably well the damages that might be awared.
    • Lawyers are expensive
    • Most disputes are settled earlier rather than later in the process.
  • Strikes. Most union contracts negotiated without a strike?
    • Prevailing wages in area are generally well known.
    • Strikes are costly to both workers and owners.
    • Both sides have an interest in reaching a settlement.

1.2 Explanation 1: Anarchy

• Waltz: “In the absence of a supreme authority there is then the constant possibility that conflicts will be settled by force” (1959, p. 188).
• But if using force is a costly option, why is it ever used? I.e., how does the lack of a central authority prevent states from negotiating agreements both sides would prefer to fighting?

1.3 Explanation 2: Preventive war

• A decline in power would lead the declining power to attack now
• But why not strike a bargain over time?

Notes

The claim is that without a credible enforcer, war will sometimes appear the best option for states that have conflicting interests.

For more, see chadefaux 2011

1.4 Explanation 3: Positive expected utility

• But again, this does not address the problem!
• The question is: when will there be bargains that both prefer to war? I.e., can both states have a positive expected utility?

Notes

• There is always an ex ante bargaining range
• Why might states fail to locate it?

2 Why States might fail to find the ex ante agreement?

2.1 1. Indivisibilities: the problem

e.g., Jerusalem

Notes

• Some issues are inherently non-divisible
  • Children
  • Holy sites (e.g., Jerusalem)
  • Thrones
• Why?
  • Physically indivisible
  • Emotional value
  • Impractical

This can lead to the disappearance of the zone of agreement

2.2 Indivisibilities: solutions

Notes

• Physical Division
• Lottery. Problems:
  • Commitment
  • Ethics
• Rotation
• Destroy or give away
• Sell
• Compensation

2.3 2. Commitment Problems

J.W. Waterhouse: “Ulysses and the Sirens”

Notes

A state may choose to fight now because it fears having to fight later

• Commitment problems caused by large and rapid shifts in power
• Power may shift because of:
  • Industrialization
  • Arms races
  • Mobilization
• E.g., 2003 Iraq war: commitment problem
  • Preventive war from US
  • Hard for Hussein to convince Bush he would not develop WMDs later
  • Saddam did not signal lack of WMD for fear of domestic rebellion and Iran.
• The empirical evidence is mixed
  • Some major wars support this pattern
    • WWI and WWII: Germany passes UK & then starts war
  • BUT
    • WWI does not begin with UK & Germany
    • Many other Power Transitions have no wars
      • US-UK, USSR-UK, etc.

2.4 Commitment problems: Solutions

• Trust-building
• Withdraw troops from border
• Negotiate disarmament
  • E.g. Washington naval treaty
• Compensation
  • E.g. partition of Poland

2.5 3. Private Information and Incentives to Misrepresent

Notes

• States have private information about their
  • capabilities
  • resolve
  • cost of war
• But private info is not enough. Also need incentives to misrepresent.

2.6 4. Private Information and Incentives to Misrepresent: Solutions

• Intelligence
• Mediation
• Costly signals

A major problem is that the states’ messages are cheap talk. I.e., they convey no information

3 Credible Threats

3.1 A Simple Game

Signaling Game

Notes

• How to convey information without verification mechanisms?
• Why do we care?
  • avoid war
  • obtain better deals
• Types of Signaling:
  • Slippery slope:
    • The challenge creates an exogenous risk of war
  • Tying hands:
    • The challenge creates an external cost of backing down
  • Sunk costs:
    • Pay an up-front cost to challenge

3.2 Slippery Slope

Slippery Slope

e.g., Troops close to border

3.3 Tying Hands

Tying Hands

e.g., Audience costs

3.4 Sunk Costs

Sunk Costs

Notes

• E.g., Mobilize troops
• The permanent military infrastructure that the United States has built in South Korea is a sunk cost designed to show North Korea that the US firmly committed to ensuring the region’s stability.

Conclusion

Review

• Fundamental puzzle: War is an inefficient way of allocating resources. Why does it occur?
• 3 rationalist explanations for war
  • Indivisibilities
  • Commitment problems
  • Incomplete Information
• Importance of signals

Answer to today’s puzzle

Puzzle: Why are sanctions typically unsuccessful in producing compliance with demands (substantial concessions by target only in 20-30% of cases)?

Answer:

• Rally around the flag
• Selection effects: if the target believes it will have to comply eventually, it may do so before the sanctions are applied Sanctions do not occur when they work; when they occur, they do not work
• States use sanctions on issues when they are unwilling to bear the cost of military action. Sanctions signal relative lack of resolve by the sanctioning state
• The target’s regime influences its leader’s vulnerability to economic pressure.

• Leaders with large winning coalitions care about economic performance, and so are susceptible to sanctions.
• Leaders with small winning coalitions stay in power through rewards to supporters. Sanctions can increase their hold on power