Morrow: The strategic setting of choices
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Morrow. 1999. The strategic setting of choices: Signaling, commitments, and negotiation in international politics. In Strategic Choice, eds. Lake and Powell, pp. 77-114.
This chapter is about how the strategic setting affects the means actors use to achieve their preferences. Morrow discusses three issues: 1) signaling (or how one can know which type of actor, e.g., status-quo or aggressive, one is dealing with); 2) commitment (how one can make credible threats or promises); and 3) bargaining (when actors agree that a solution is possible but disagree over which solution is best). He then illustrates how this framework represents an improvement over previous understandings (notably Jervis' work on misperception) by looking at explanations for alliances and crisis behavior.
"Signaling" refers to clues an actor has about the intentions of some other actor. For a non-cooperative game, the key to a signal being effective is that it must impose some cost on the sender. The key cost for signaling are "audience costs" � that by making a certain statement, an audience (usually domestic) will punish the leader. The fact that he was willing to endure that cost "signals" to the other state that he must really mean what he is saying (that is, it's not just "cheap talk.") Morrow uses the example of Sadat and the Camp David accords. How was Israel to know whether Sadat was serious about peace or just wanted to gain more territory for Egypt? Israel knew it could trust Sadat only after he came to make a speech for peace in front of the Knesset, which generated huge domestic problems for him. The key to a signal being effective is that it must be costly enough. If costly enough, those who are serious about the signal will send it, those who are not, won't; in other words, the two types "separate." If the costs are too low, then cheap talk becomes very easy, and the types, instead of taking different actions, "pool" � they all send the cheap signal. Though he doesn't use the term, game theorists model such a situation as a "perfect Bayesian equilibrium."
"Commitment" refers to the ability of an actor to make a credible threat or promise. Commitment is principally a problem when "an actor's incentives change over time" (92), that is, initially an actor wants to make a promise, let's say to pay back a loan, but later, when facing reelection, doesn't want to pay it back because of the domestic hardship it will cause (this is also known as the "time-inconsistency problem.") Morrow then discusses ways to make a credible commitment (basically the same as Schelling's discussion): contract a third party to enforce the deal, structure domestic institutions such that one group wants to see the deal fulfilled, or give power to the second party to enforce the deal itself.
"Bargaining" refers to situations in which both parties want to make an agreement, but are not sure exactly what form it should take. Each side has a "reservation level," the minimum deal it is willing to accept, and "outside options," which could refer to stopping the bargaining or fighting a war. The challenge in bargaining is knowing your opponent's reservation level � bringing us back to the importance of signaling about an actor's type (in this case signifying his reservation level). Bargaining can be multilateral and it can involve many issues linked together, but the key fact is that bargaining occurs because "reservation levels and often the existence of a zone of agreement are not common knowledge" (102). One note: Morrow argues that the "commitment problem must be solved before bargaining can begin" (102), whereas Schelling sees ability to commit as part of the bargaining process.
Morrow then provides two examples of how this approach to IR helps to explain some outstanding puzzles. First, the "old" explanation of alliance formation, e.g., Christensen and Snyder, emphasized that alliances provided a public good � defense against an aggressor � and therefore each actor had an incentive to "defect" and let other countries do the work. Morrow argues that this explanation is unsatisfying because it doesn't explain why so many countries formalized alliances with treaties � why not just wait until the situation required your help, and join in then? Morrow suggests that alliances are formed with the intention to 1) send a signal, 2) create a commitment. First, by putting an alliance on paper, they send a signal that they have the intention to intervene � this intention is costly (restricts state autonomy, and forces allies to reconcile conflicting interests), so it generates a "separating" equilibrium � those with the intention to fight an aggressor form alliances, those that do not, don't. Second, alliances create a commitment because backing down in the face an aggressor would jeopardize the credibility of the country in the future.
Second, Morrow argues that his approach improves understanding of the dynamics of crisis bargaining by making a subtle but crucial distinction with Jervis' explanation for why conflict erupts. Jervis argues that states may misperceive the likelihood that their opponent will back down; in this sense, conflict is caused by a psychological, and not a rational, process. Morrow instead asserts that conflict is caused by uncertainty about which "type" the rival is. This uncertainty exists for two reasons. First, Morrow divides a nation's capabilities into two types: observable and unobservable. The observable is military power, economic might, etc, unobserved refers to any unseen factor that would increase resolve. Because the unobservables are unknown, states are uncertain about the total capabilities of their opponents. Second, uncertainty exists because there is often not a large enough difference in costs between signals � in this case, to escalate or not escalate � to generate a "separating" equilibrium. All states do the same thing � "cheap talk" (escalation) � creating a "pooling" equilibrium with resulting uncertainty about the enemy. Conflict still emerges for "rational" reasons � states did the best they could with the signals and information they had, whereas for Jervis they emerge because of cognitive ("non-rational") process of misperceiving the enemy's intentions. One key implication of Morrow's view is that the distribution of capabilities should have no bearing on the likelihood of war, as there will always be uncertainties about the opponent's unobserved capabilities and because signaling the level of resolve an actor may not generate a separating equilibrium.
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