involuntary defection in two level games ratification failures are prevalent in international relations but due to the assumption of unitary actors in international relations theory theoretical analysis has been underdeveloped in formalizing putnam s metaphor of two level games this article shows that incomplete information about the preferences of domestic actors is crucial for understanding ratification failures furthermore institutional mechanisms affect bargaining outcomes through their impact on information revelation in particular it is found that two sided constraints lead to relatively equitable bargaining outcomes and that renegotiation and pre negotiation poll taking can induce strategic voting by domestic constituents thereby exacerbating domestic constraints

decision maker preferences for international legal cooperation why do some decision makers prefer big multilateral agreements while others prefer cooperation in small clubs does enforcement encourage or deter institutional cooperation we use experiments drawn from behavioral economics and cognitive psychology along with a substantive survey focused on international trade to illustrate how two behavioral traits patience and strategic reasoning of individuals who play key roles in negotiating and ratifying an international treaty shape their preferences for how treaties are designed and whether they are ratified patient subjects were more likely to prefer treaties with larger numbers of countries and larger long term benefits as were subjects with the skill to anticipate how others will respond over multiple iterations of strategic games the presence of an enforcement mechanism increased subjects willingness to ratify treaties however strategic reasoning had double the effect of adding enforcement to a trade agreement more strategic subjects were particularly likely to favor ratifying the agreement we report these results for a sample of 509 university students and also show how similar patterns are revealed in a unique sample of ninety two actual us policy elites under some conditions certain types of university student convenience samples can be useful for revealing elite dominated policy preferences different types of people in the same situation may prefer to approach decision making tasks and reason through trade offs in materially different ways

recent developments in consumer credit risk assessment consumer credit risk assessment involves the use of risk assessment tools to manage a borrower s account from the time of pre screening a potential application through to the management of the account during its life and possible write off the riskiness of lending to a credit applicant is usually estimated using a logistic regression model though researchers have considered many other types of classifier and whilst preliminary evidence suggest support vector machines seem to be the most accurate data quality issues may prevent these laboratory based results from being achieved in practice the training of a classifier on a sample of accepted applicants rather than on a sample representative of the applicant population seems not to result in bias though it does result in difficulties in setting the cut off profit scoring is a promising line of research and the basel 2 accord has had profound implications for the way in which credit applicants are assessed and bank policies adopted

climate coalitions and international trade assessment of cooperation incentives by issue linkage this paper investigates climate control coalition games it studies whether incentives exist for non cooperating nations like the usa to join a coalition based upon issue linkage issue linkage is considered through increased r d expenditures triggering improved technological innovations that advance energy efficiencies model calculations demonstrate that incentives exist for non cooperating countries like the usa to join a climate control coalition if nations cooperate on technological innovations restrictions on trade such as sanction mechanisms against non cooperating countries are not necessarily an incentive to join a coalition technological spillover effects lead to improved economic situations and increased energy efficiencies in non cooperating countries

economic and regulatory capital allocation for revolving retail exposures abstract we present two internal capital allocation models and compare the capital ratios they generate with those prescribed by the latest revision of basel s new capital accord proposal for advanced retail portfolios which allows for explicit future margin income recognition given a test portfolio of credit card exposures that we assemble we find that basel s ratios are closer to those generated by our models for low credit risk segments we attribute the discrepancies to the different ways basel and our models account for future margin income to basel s assumptions about asset correlations and to one model taking macroeconomic conditions into account

free to trade democracies autocracies and international trade trade relations we address this issue by analyzing the relationship between regime type and trade policy in a formal model of commercial policy we establish that the ratification responsibility of the legislature in democratic states leads pairs of democracies to set trade barriers at a lower level than mixed country pairs composed of an autocracy and a democracy we test this hypothesis by analyzing the effects of regime type on trade during the period from 1960 to 1990 the results of this analysis accord with our argument democratic pairs have had much more open trade relations than mixed pairs t he effects of domestic political institutions on trade policy have long been a source of controversy among social scientists despite the widespread interest that this debate has prompted however remarkably few studies have addressed the links between political regime type and commercial policy 1 most work on the political economy of trade policy that examines institutional factors focuses only on variations in policy among democracies and avoids comparing democracies with other types of regimes moreover many analyses of trade barriers especially those by economists ignore the effects of domestic political

less filling tastes great the realist neoliberal debate this essay examines and reformulates the realist neoliberal debate focusing initially on the issue of the attribution of goals to states we argue that not only are goals merely the epiphenomena of other things but also that their specification constitutes but a re description of strategic environments that is although an attribution of goals may contribute to our characterization of outcomes a discussion of them is not central to the development of a theory that explains and predicts the outbreak of conflict and the patterns of cooperation instead we argue that the realist neoliberal debate should be recast so that our central research agenda is the development of substantively specific models that allow us to ascertain how the equilibrium to a game in which states structure international affairs influences the types of issue specific subgames states play how countries coordinate to equilibria of different types how we can characterize the coordination problems associated with different equilibria how states can enhance the attractiveness of an equilibrium and how states can signal commitments to the strategies that are part of that equilibrium

the change of tide in political cooperation a limited information model of european integration european integration follows a puzzling stop and go pattern that traditional international reations theories cannot fully explain the predominating paradigms only account for either the achievements or the setbacks of the integration process an information based explanation makes it possible to move beyond structural accounts provided by realist and functionalist scholarship such an approach yields solid micro level foundations of international bargaining and focuses on leaders use of threats in negotiations about regional cooperation situations involving governments agreeing on the necessity of further integration but disagreeing about its level create room for strategic manipulation of information asymmetries this type of uncertainty stems from the manipulator s information and control advantages concerning domestic costs the analysis of different summit meetings demonstrates the empirical relevance of such maneuvers for the dynamics of european integration

rational hegemons excludable goods and small groups an epitaph for hegemonic stability theory in defining international free trade as a public good hegemonic stability theory posited early in the 1970s that its reliable supply depended upon a distribution of international power analogous to that within a privileged group more recently however critics have challenged three assumptions fundamental to hegemonic theory its premises of free trade public goods and privileged groups they have concluded that hegemony is not necessary for and indeed may be antithetical to a stable world economy based on market exchange the author argues that the critics overstate their case the assumptions they attack allow hegemonic theory to represent analytically several critically important barriers to free trade among states among these are the existence of strategic interdependence among the actors and the prevalence of informational asymmetries the most significant flaw in hegemonic theory is its neglect of the essence of the domain to which it applies the politics of inter state trade in an anarchic world

issue linkage and issue tie in in multilateral negotiations we describe a model of international multidimensional policy coordination where countries can enter into selective and separate agreements with different partners along different policy dimensions the model is used to examine the implications of negotiation tie in the requirement that agreements must span multiple dimensions of interaction for the viability of multilateral cooperation when countries are linked by international trade flows and transboundary pollution we show that while in some cases negotiation tie in has either no effect or can make multilateral cooperation more viable in others a formal tie in constraint can make an otherwise viable joint multilateral agreement unstable

issue linkages in international crisis bargaining students of international relations have long been concerned with questions regarding the impact of issue linkages on bargaining outcomes unfortunately the body of theory attempting to provide a systematic and rigorous analysis of issue linkages is woefully underdeveloped in this study i contribute to the development of this theory with a particular emphasis on accounting for cases in which issue linkage fails in international crisis bargaining the spatial model of crisis bargaining which is a formal model constituting a synthesis of the spatial theory of voting and traditional utility based bargaining theory is used to develop a theory of issue linkages and to address a number of points regarding linkage strategy that are found in the literature after demonstrating how linking issues can affect the outcome of an international crisis i argue that existing explanations for linkage failure are inadequate the majority of the paper is devoted to determining what characteristics of the issues involved and of the disputants determine the likelihood that a linkage attempt will be successful i conclude with a brief discussion relating these results to the literature on crisis management

structural models in consumer credit abstract we propose a structural credit risk model for consumer lending using option theory and the concept of the value of the consumer s reputation using brazilian empirical data and a credit bureau score as proxy for creditworthiness we compare a number of alternative models before suggesting one that leads to a simple analytical solution for the probability of default we apply the proposed model to portfolios of consumer loans introducing a factor to account for the mean influence of systemic economic factors on individuals this results in a hybrid structural reduced form model and comparisons are made with the basel ii approach our conclusions partially support that approach for modelling the credit risk of portfolios of retail credit

trade policy cross border externalities and lobbies do linked agreements enforce more cooperative outcomes abstract we analyze whether linking international cooperation in trade policy to environmental policy or other issues with nonpecuniary externalities promotes more cooperation in both policies or whether cooperation in one is strengthened at the expense of the other in the context of self enforcing agreements we show that if the policies are independent in the government s objective function then linkage promotes cooperation in one policy at the expense of the policy that is easier to enforce under no linkage however if the linked policies are not independent and if these policies are strategic complements then linkage can sustain more cooperation in both issues than no linkage the policies are strategic complements only if i the production externality has cross border effects ii the weight on the externality cost is high iii import competing lobbies are not powerful

in view of ratification governmental preferences and domestic constraints at the amsterdam intergovernmental conference the bargaining product of the amsterdam intergovernmental conference the amsterdam treaty dwindled down the draft proposal to a consensus set of all fifteen member states of the european union eu using the two level concept of international bargains we provide a thorough analysis of how this consensus set was reached by issue subtraction with respect to domestic ratification constraints drawing on data sets covering the positions of all negotiating actors and ratifying national political parties we first highlight the differences in the amsterdam ratification procedures in the fifteen member states of the eu this analysis allows us to compare the varying ratification difficulties in each country second our empirical analysis of the treaty negotiations shows that member states excluded half of the amsterdam bargaining issues to secure a smooth ratification because member states with higher domestic ratification constraints performed better in eliminating uncomfortable issues at the amsterdam intergovernmental conference issue subtraction can be explained by the extent to which the negotiators were constrained by domestic interests

entrepreneurship social mobility and income redistribution in south india development economists have been preoccupied with the problem of increasing the size of the gnp pie to the relative neglect of its distribution despite the recent disenchantment with the viewpoint that all classes share in the benefits of industrial growth empirical data on the distribution of income business opportunity and economic power are in short supply many of the studies on entrepreneurship and economic development when they are not apologetics for ruthless capitalist exploitation as paul baran suggests extol the achievements of the capitalist entrepreneur without examining class origins and monopoly advantage joseph schumpeter sees entrepreneurs irrespective of class origin as heroic figures with the dream and will to found a private kingdom to conquer adversity to achieve success for its own sake and to experience the joy of creation for gustav papanek 1967 the private entrepreneur who is frugal diligent far sighted remarkably able and willing to take political risks is in large part responsible for the success of pakistan in achieving rapid industrialization

managing domestic differences in international negotiations the strategic use of internal side payments when nations negotiate often the toughest bargaining is not between nations but within them the reason is simple proposed international agreements no matter how much in the national interest inevitably have differential effects on factional concerns threatening to make winners of some and losers of others potential losers often have the power to prevent agreements not to their liking thereby limiting what is possible in international negotiations this article uses a negotiation analytic framework to analyze the consequences of such limits it argues that limits need not be a liability for a divided country under some circumstances they may provide a bargaining advantage and demonstrates circumstances under which intracountry differences are desirable and undesirable from a national perspective more specifically the article shows that the effect of domestic differences on international negotiations depends on the configuration of domestic interests on the nature of domestic political processes and on characteristics of the international bargain it then explores a particular dimension of the domestic process the ability to link issues which allow factions to make internal side payments it demonstrates that internal issue linkage can have profound effects on the external bargain and explores the strategic implications of side payments for those who would manage domestic differences in international negotiations

political leadership and regime formation on the development of institutions in international society leadership plays a critical but poorly understood role in determining the success or failure of the processes of institutional bargaining that dominate efforts to form international regimes or more generally institutional arrangements in international society an examination of the nature of institutional bargaining serves as a springboard both for pinpointing the role of leadership in regime formation and for differentiating three forms of leadership that regularly come into play in efforts to establish international institutions structural leadership entrepreneurial leadership and intellectual leadership because much of the real work of regime formation occurs in the interplay of different types of leadership the study of interactions among individual leaders is a high priority for those seeking to illuminate the processes involved in the creation of international institutions not only does such a study help to explain the conditions under which regimes form or fail to form but it also provides an opportunity to bring the individual back in to an important area of international affairs

side payments versus security cards domestic bargaining tactics in international economic negotiations the literature on international economic cooperation has devoted relatively little attention to domestic bargaining tactics and their determinants recent scholarship has tended to stress the utility and frequency of side payments while discounting other prominent bargaining tactics and a broader understanding of tactical choice this article argues that policymakers choose among domestic bargaining tactics to garner support when faced with situations in which other government officials or societal interest groups block the ratification of international economic agreements focusing on offers of side payments and attempts at issue redefinition the article s findings suggest that differences in domestic resistance to proposals of material compensation and in external security threat may explain choices between those tactics in domestic bargaining

disguised protectionism and linkages to the gatt wto member states of the gatt wto have linked some issue areas outside trade to the institution and did so with varying depths at the same time they have chosen not to link other issue areas what accounts for this variation the author argues that states establish a legalized linkage between the gatt wto and an issue area outside it when they are uncertain about the possibilities of disguised protectionism such uncertainty exists under two conditions when diversity in regulations in an issue area across states generates a large adverse impact on trade negative externalities but that diversity can be justified at the international level for 1 having an independent objective apart from hampering trade and 2 when there are few alternative policies to achieve that objective legitimacy states establish a highly legalized linkage in these situations to reduce the uncertainty and minimize disguised protectionism by contrast when regulatory diversity exhibits low legitimacy states establish only a weakly legalized linkage in the absence of meaningful externalities they do not establish any linkages the author evaluates this argument in two ways he provides an overview of eleven issue areas about which there have been some debates or conflicts about linkages to the gatt wto in addition he carries out in depth case studies of three issue areas labor standards environmental standards and health safety standards the findings of this article contribute to a better understanding of international institutions and cooperation as well as of the evolution of the multilateral trade institution

trade blocs currency blocs and the reorientation of world trade in the 1930s we analyze the impact of commercial and financial policies on the reorientation of trade in the 1930s we report evidence that commercial policies attenuated prior connections between income growth and trade and that exchange rate instability marginally discouraged international trade in contrast the tendency toward regionalization commonly ascribed to the formation of trade and currency blocs was already evident to a considerable extent prior to the regional policy initiatives of the 1930s this reorientation is more properly attributed to ongoing historical forces such as commercial and financial links between countries forged over many years

bargaining power at europe s intergovernmental conferences testing institutional and intergovernmental theories this article examines how european union member states make choices about political institutions at intergovernmental conferences the grand negotiations where many key institutional changes are made using data on member state preferences from the intergovernmental conference leading to the treaty of amsterdam i test competing bargaining theories institutionalism and intergovernmentalism and present strong evidence that institutionalism better captures negotiations compared to intergovernmentalism i present a formal model to discern between these competing theories of bargaining power derive a statistical model directly from this formal model and then use data from the european union s treaty of amsterdam to test these theories and corresponding power sources veto power associated with institutional models better explains intergovernmental conference outcomes compared to power from size and economic might often associated with intergovernmental analyses i would like to thank kathy bawn julia gray tim groseclose james honaker joe jupille thomas konig jeff lewis sven oliver proksch george tsebelis and the participants in ucla s graduate student formal theory and statistical methods workshops for their insightful comments on various drafts of this article i am also grateful for the comments from several anonymous reviewers and the editors at international organization an earlier version of this article was presented at the annual meeting of the midwest political science association april 2006 data and replication material are available at http faculty unlv edu jslapin

patently misleading partial implementation and bargaining leverage in sino american negotiations on intellectual property rights we develop a model of international negotiation in which states antici pate that the agreements they sign will only be partly implemented the results dif fer significantly from theories of domestic ratification that have previously been applied to this problem negotiators do not try to satisfy the implementer and may even choose agreements that the implementer would explicitly reject in a ratification model par tial implementation also makes it possible for two negotiators to reach agreements outside their usual win set this situation may allow one country to make extra ordinary concessions knowing that some provisions will never be fully imple mented we apply these claims to sino american negotiations over intellectual property rights where implementation has been a recurrent issue the theory enriches the theory of two level games which has focused much too narrowly on formal rati fication without amendment as the canonical case of domestic influence over inter national bargaining

interests power and multilateralism multilateralism characterizes to varying degrees patterns of interaction among states and the formal organizations they construct the utility of multilateral norms or organizations varies with the type of cooperation problem states confront thus the functional logic of international cooperation leads to hypotheses about the conditions under which the institution of multilateralism may be a feasible and efficient solution as in coordination problems and those under which it will not as in collaboration problems within these constraints powerful states choose institutions that will serve their interests with multilateral arrangements becoming more attractive as the future is valued more highly multilateral institutions should be stable in circumstances of changing distributions of power relative to more hierarchical institutions the vulnerability of patterns of international cooperation to various exogenous changes depends on the type of strategic interaction underlying state behavior

why should trade negotiators negotiate about in recent years there have been growing demands to make trade liberalization contingent on adoption of common labor and environmental standards the straightforward economic answer is that this makes little sense neither the gains from trade nor the gains from appropriate regulation are compromised if other countries impose standards that are weaker than your own it is possible to offer second bet economic rationales for harmonization but these are empirically unconvincing the only serious argument in favor or regulation is political that regulation which is in the national interest may not be politically feasible unless other countries do the same

the limitations of structural theories of commercial policy if a structural theory is one that purports to explain behavior in terms of environmental conditions and that largely eschews analysis of the internal processes of decision makers then it is difficult to identify a theory of commercial policy which is not structural most microeconomic theory is structural so are most balance of power theories in the realm of theories of commercial policy hegemonic stability theories as well as some recently developed theories of international tariff levels fit this description in the latter category judith goldstein s work which attempts to account for american commercial policy in terms of the ideology of american central decision makers and charles kindleberger s ambitious sketch of a general theory of 19th century tariff changes in terms of the diffusion of liberal ideology constitute lonely examples of nonstructural research strategies

small island developing states and their economic vulnerabilities abstract many small island developing states sids face special disadvantages associated with small size insularity remoteness and proneness to natural disasters these factors render the economies of these states very vulnerable to forces outside their control a condition which sometimes threatens their very economic viability the gdp or gnp per capita of these states often conceals this reality in this paper the major vulnerabilities faced by sids are discussed and when possible quantified in the form of an index an attempt is also made to construct a composite index of vulnerability

delegation ratification and u s trade policy why divided government causes lower tariffs recent research on executive legislative relations concludes that divided government causes higher tariffs and inhibits international cooperation i find that divided government leads to lower u s

samsung card lending model samsung card lending model sclm analyzes cash flow in individual accounts and measures the level of company wide risk serving as a risk and portfolio management model in the consumer lending business the main features of sclm are as follows default ratios such as intrinsic balance default probability and annual default ratio are computed using the past present and future cash flows of accounts the provision is shown as the total sum of write offs the size of capital required is determined by default probability distribution the price for new accounts is quoted based on cash flow simulations reflecting future business environments sclm has shown good performance in samsung card consumer lending business since the korean credit card crisis of 2003

negotiation analysis a characterization and review negotiation analysis seeks to develop prescriptive theory and useful advice for negotiators and third parties it generally emphasizes the parties underlying interests as distinct from the issues on the table and the positions taken alternatives to negotiated agreement approaches to productively manage the inherent tension between competitive actions to claim value individually and cooperative ones to create value jointly as well as efforts to change perceptions of the game itself since advice to one side does not necessarily presume the full game theoretic rationality of the other side s negotiation analysts often draw on the findings of behavioral decision analysts and economists further this approach does not generally assume that all the elements of the game are common knowledge thus the negotiation analytic approach tends to de emphasize the application of game theoretic solution concepts or efforts to find unique equilibrium outcomes instead to evaluate possible strategies and

rational deterrence theory and comparative case studies several recent books have argued that comparative case studies of crises demonstrate the failure of rational deterrence theory they have offered certain empirical generalizations as substitutes this paper shows that such contentions are unwarranted first the empirical generalizations are impressive as historical insights but they do not meet the standards for theory set out by the most sophisticated case study analysts themselves second the tests of rational deterrence used in the case studies violate standard principles of inference and the ensuing procedures are so biased as to be useless rational deterrence then is a more successful theory than portrayed in this literature and it remains the only intellectually powerful alternative available case studies are essential to theory building more efficiently than any other methods they find suitable variables suggest middle range generalizations for theory to explain and provide the prior knowledge that statistical tests require their loose constraints on admissible propositions and suitable evidence are appropriate and even necessary for these tasks these same characteristics however inevitably undermine all attempts to construe case study generalizations as bodies of theory or tests of hypotheses

informal market governance in japan s basic materials industries too much emphasis has been placed on formal state policies and on ties between individual firms to explain japanese economic behavior and impediments to imports in japanese markets we need to look instead at informal governance by trade associations in so doing the concept of relational contracting should be applied not just to dyadic relationships between individual firms but also to relationships between entire industries whole industries engage in relational contracting to ensure the stability of both prices and supplies these industry agreements stabilize japanese markets but at the same time keep imports out of them this informal governance complements state policies to support uncompetitive industries these agreements are more likely to occur and succeed between selling and buying industries that each are relatively concentrated when upstream products are standardized when upstream goods constitute a smaller share of downstream production costs when these sectors have not experienced previous conflicts that undermine cooperation and when the ministry of international trade and industry wants a domestic supply of its products

domestic opposition and signaling in international crises this article explores the effect of domestic political competition on the escalation of international crises it combines an incomplete information model of crisis bargaining with a simple model of two party electoral choice one state has two strategic actors a government and an opposition party both of which declare openly whether they support the use of force to alter the status quo the rival state updates its beliefs and selects its strategy in response to both signals the parties payoffs depend upon a retrospective evaluation by the domestic electorate the model shows that the inclusion of a strategic opposition party decreases the ex ante probability of war by helping to reveal information about the state s preferences this finding has important implications for research on democracy and international conflict since it suggests a mechanism through which democratic states can overcome informational asymmetries which have been identified as a central obstacle to negotiation

determining the need for issue linkages in multilateral trade negotiations in multilateral trade negotiations trade offs usually are made within the issue areas that are on the agenda in the absence of cross issue trade offs linkages agreement may not be possible to maximize both the potential gains from trade and the scope for agreement negotiators need to be willing and able to consider the feasibility of issue linkages this raises the practical problem of determining when such trade offs are likely to be necessary although quantitative methods of policy analysis have been developed they have not been widely used by policymakers in part owing to the fact that negotiations focus largely on nontariff measures this article proposes a qualitative approach to the problem and applies it to the tokyo and uruguay round negotiations on safeguards to protect domestic industries from problems related to increases in imports

alliances preferential trading arrangements and international trade c oncerns about the stability of the international trading system have become widespread in recent years many observers feel that the relatively liberal system forged after world war ii is being undermined by the proliferation of preferential trading arrangements these concerns have spawned a great deal of empirical research much of which has found that such arrangements exert a substantial effect on trade flows yet these studies have neglected the role political military alliances play in shaping patterns of commerce this omission is important because there is ample reason to expect that alliances guide trade flows and preferential trading arrangements often are comprised of allies as a result extant analyses risk confusing the effects of alliances and preferential trading arrangements on commerce and systematically overstating the effects of the latter in this study we analyze the effects of alliances and preferential trading arrangements on bilateral trade flows both factors are likely to promote trade among members but we argue that the interaction between them is central to explaining patterns of commerce the combination of an alliance which creates political incentives for participants to engage in trade and a commercial institution which liberalizes trade among members is expected to provide a considerable impetus to commerce among parties to both 1

replication realism and robustness analyzing political regimes and international trade makers who formulate trade policy we show that dai fails to accurately replicate our model and hence erroneously claims that the new equilibria she deduces are consistent with it in addition we demonstrate that in altering one of our assumptions dai offers a model that is less realistic as well as inconsistent with the substantive literature on international bargaining finally we question the robustness of her approach due to these problems of replication realism and robustness we conclude that dai s model is of limited utility ur article established that pairs of democracies trade more freely than mixed country pairs composed of a democracy and an autocracy mansfield milner and rosendorff 2000 hereafter mmr xinyuan dai 2002 asserts that our conclusion depends on the preferences of the decision makers who formulate trade policy dai is incorrect her results differ from ours solely because she has changed a key assumption of the model given the stated assumptions of our model each player s behavior in equilibrium is optimal and is a best reply it is often useful to debate the merits of a model s assumptions and it is not surprising that altering the assumptions can affect a model s results dai however ignores one of our explicitly stated assumptions and fails to acknowledge that her results differ from ours as a consequence moreover she never touches upon the relative merits of her assumption but when choosing a modeling strategy it is important to be attentive to the assumptions one uses preferring those that are more realistic and result in more general conclusions dai s model suffers from serious problems in this regard particularly because of its unrealistic assumptions about international economic negotiations furthermore dai offers no evidence about the robustness of her claims in contrast to our model finally the empirical record lends greater support to our argument than dai s since we found strong evidence that democratic pairs have had more open trade relations than mixed pairs irrespective of policy makers preferences in the following sections we elaborate on these problems of replication realism and robustness first we show that dai fails to replicate our model faithfully and hence erroneously claims that the new equilibria she deduces are consistent with it second we show that altering our assumption as dai does yields a model that is less realistic and less consistent with the substantive literature on international bargaining third we question the robustness of her approach we conclude that her model is of limited utility not only does our model capture an important element of international economic negotiations missing in dai s approach but also it yields results that are robust and have empirical support

does issue linkage work evidence from european alliance negotiations 1860 to 1945 though scholars widely claim that issue linkage the simultaneous negotiation of multiple issues for joint settlement can help states conclude international agreements there exist some notable skeptics resolving this debate requires empirical evidence however beyond a few case studies there exists no direct and systematic evidence that issue linkages actually increase the probability of agreement i address this lack of direct and systematic evidence by combing original data on failed alliance negotiations with data from the alliance treaty obligations and provisions atop database using matching techniques i find that for alliance negotiations between 1860 to 1945 offers of trade linkage did substantially increase the probability of agreement besides confirming issue linkage s ability to help clinch an agreement this article s research design and evidence have far reaching implications for the study of negotiations and alliances the research design illustrates the value of considering the dogs that didn t bark as it identifies both successful and failed negotiations the article s evidence explains the high rate of alliance compliance identified by previous scholars and highlights a need to rethink the alliance formation process

domestic institutions and the credibility of international commitment japan and the united states the domestic politics of great powers significantly influence the fate of such multilateral regimes at the general agreement on tariffs and trade and the north atlantic treaty organization unless great powers can make credible commitments to support those regimes few countries will offer more than token support domestic political constraints may bind national leaders to good faith adherence to multilateral regimes even if international circumstances do not compel adherence domestic politics also influence the ability of other countries to monitor national adherence to agreements case studies of u s and japanese responses to multilateral regimes show how the nature of the national electoral system the division of powers in the government and the transparency of the national political system influence credibility and lead to special features of multilateral economic and security regimes

a strategic theory of regime integration and separation states frequently disagree on the importance of cooperation in different issue areas under these conditions when do states prefer to integrate regimes instead of keeping them separated we develop a strategic theory of regime integration and separation the theory highlights the nature of spillovers between issues positive spillovers exist when cooperation in one issue area aids the pursuit of objectives in another issue area negative spillovers exist when cooperation in one issue area impedes this pursuit in another issue area conventional wisdom suggests that both positive and negative spillovers foster greater integration we argue that negative spillovers encourage integration while positive spillovers do not states integrate not to exploit positive spillovers between issues but to mitigate negative spillovers to test our theory we examine the degree of integration or separation among environmental regimes

the politics of international regime formation managing natural resources and the environment why do actors in international society succeed in forming institutional arrangements or regimes to cope with some transboundary problems but fail to do so in connection with other seemingly similar problems this article employs a threefold strategy to make progress toward answering this question the first section prepares the ground by identifying and critiquing the principal models embedded in the existing literature on regime formation and the second section articulates an alternative model called institutional bargaining the third section employs this alternative model to derive some hypotheses about the determinants of success in institutional bargaining and uses these hypotheses in a preliminary way to illuminate the process of regime formation in international society to lend empirical content to the argument the article focuses throughout on problems relating to natural resources and the environment

domestic institutions and international bargaining the role of agent veto in two level games putnam s 1988 conjecture that negotiators can benefit from their domestic constraints implies that they may want to impose domestic constraints on themselves by granting veto power to an agent i show that a negotiator s decision to employ an agent as veto player depends on the kinds of information available to the foreign country and the alignment of preferences between the negotiator and the agent when the foreign country has incomplete information about the negotiator s preferences and the negotiator has preferences too divergent from those of the agent the negotiator will not give veto power to the agent however this applies only to an agent with extreme preferences and a surprisingly large number of agent types will receive veto power the attractiveness of the agent veto to the negotiator is in part due to its informational effect by granting veto power to an agent the negotiator can transmit more information to the foreign country and capture informational gains that would be lost in the absence of the agent veto

from unanimity to consensus an analysis of the negotiations at the eu s constitutional convention disputes filed at the world trade organization wto are attracting a growing number of third parties most observers argue that their participation influences the institution s rulings the authors argue that third parties undermine pretrial negotiations their influence on rulings is conditioned by this selection effect they test their hypotheses along with the conventional wisdom using a data set of wto disputes initiated through 2002 consistent with the authors argument they find that third party participation lowers the prospects for early settlement controlling for this selection effect the evidence also suggests that third party support increases the chances of a legal victory at the wto

pricing derivatives on financial securities subject to credit risk this article provides a new methodology for pricing and hedging derivative securities involving credit risk two types of credit risks are considered the first is where the asset underlying the derivative security may default the second is where the writer of the derivative security may default we apply the foreign currency analogy of jarrow and turnbull 1991 to decompose the dollar payoff from a risky security into a certain payoff and a spot exchange rate arbitrage free valuation techniques are then employed this methodology can be applied to corporate debt and over the counter derivatives such as swaps and caps the purpose of this article is to provide a new theory for pricing and hedging derivative securities involving credit risk two sources of credit risk are identified and analyzed the first is where the asset underlying the derivative security may default paying off less than promised this is the case for example with imbedded options on corporate debt the second is the credit risk introduced by the writer of the derivative security who may also default examples include over the counter writers of options on eurodollar futures swaps and swaptions for pricing derivative securities involving credit risk there are currently two approaches the first views these derivatives as contingent claims not on the financial securities themselves but as compound options on the assets underlying the financial securities this is the case for example with the pricing of imbedded options on corporate debt see merton 1974 1977 black and cox 1976 ho and singer 1982 chance 1990 and kim ramaswamy and sundaresan 1993 or the pricing of vulnerable options see johnson and stulz 1987 in practice however this valuation methodology is difficult to use first the assets underlying the financial security are often not tradeable and therefore their values are not observable this makes application of the theory and estimation of the relevant parameters problematic second as in the case of corporate debt all of the other liabilities of the firm senior to the corporate debt must first and simultaneously be valued this generates significant computational difficulties as a result this approach has not

two level games and bargaining outcomes why gaiatsu succeeds in japan in some cases but not others one of the strengths of robert putnam s two level bargaining game model is its ability to capture how international negotiations make it possible for negotiators to pursue synergistic strategies aimed at improving their prospects for a favorable deal by reshaping politics in both their own and their counterparts domestic arenas while reaffirming the utility of this approach this article argues that putnam describes only some of the synergistic strategies available to negotiators in addition to reverberation and synergistic linkage a negotiator can also reshape politics in his or her counterpart s domestic arena in two other ways 1 by transforming decision making in ways that expand elite participation and bring the weight of public opinion to bear on policies that were previously dictated by small groups of privileged domestic actors and 2 by influencing the way in which policy alternatives are considered in the decisionmaking process through an examination of the structural impediments initiative a set of negotiations through which the united states applied a great deal of foreign pressure gaiaisu on japan the article makes the case for the above modifications to the putnam model and argues that participation expansion strategies are most likely to be successful when involvement in decision making before foreign intervention is limited and latent support for foreign demands exists outside the privileged elite while alternative specification is most likely to work when opportunities exist to link favored policy proposals to already recognized domestic problems

the dynamics of the two level bargaining game the 1988 brazilian debt negotiations n this study we examine the case of the brazilian debt rescheduling lagreement of 1988 as a two level game in which each of the two main negotiators the brazilian state and the international bank advisory committee must satisfy its own constituents while trying to negotiate an international agreement the literature on the politics of debt and adjustment tends to look either at the domestic politics of stabilization and adjustment or at collective action at the level of the international regime we argue however that the interaction between the domestic and international levels must be understood in order to explain the outcomes of international debt negotiations drawing on the concept of the two level game in international politics suggested by robert putnam

power politics and the free trade bandwagon what explains the world s newfound enthusiasm for free trade are government leaders integrating their economies to achieve pareto improving gains or is it because a critical mass of pro free trade governments has acquired the capacity to go it alone leaving would be protectionists with a choice between a bad option opening their markets at very high political cost and an even worse alternative incurring the still higher political costs of exclusion this article suggests that in practice mutual gains seeking motivations are frequently dominated by defensive ones the north american free trade agreement is a case in point without in any way being bullied or coerced the mexican and canadian governments agreed to take part in a multilateral arrangement that the evidence suggests neither much liked although hard to reconcile with the political economy literature s positive sum model of international cooperation this finding is consistent with the broader power politics model introduced here

estimating strategic models of international treaty formation this article develops an empirical framework for analysing the timing of international treaties a treaty is modelled as a dynamic game among governments that decide on participation in every period the net benefit of treaty membership increases over time spillovers among members and non members accelerate or delay treaty formation by transforming participation into a strategic complement or substitute respectively the predictions of the model inform the estimation of the structural parameters based on a cross section of treaty ratification dates with this approach i estimate the sign and magnitude of strategic interaction in the ratification of the montreal protocol in the formation of europe s preferential trade agreements and in the growth of germany s network of bilateral investment treaties through a series of counterfactual experiments i explore different mechanisms that give rise to strategic interaction in the formation of these treaties

beyond globalism remaking american foreign economic policy vernon the acknowledged authority in international economics analyzes the past present and dangerous future of american trade politics and policymaking he recommends giving up on comprehensive global agreements and urges narrow agreements between a small number of countries

neorealism and neoliberalism the classic dialectic between realist and liberal theories of international politics as expressed by robert o keohane ed in neorealism and its critics and richard rosecrance the rise of the trading state can be transcended neither paradigm singularly explains international behavior realism is the dominant approach but liberal theories of transnationalism and interdependence help to illuminate how national interests are learned and changed keohane and fellow critics argue that neorealism articulated definitively in kenneth waltz s theory of international politics 1979 elegantly systematizes realism but concentrates on international system structure at the expense of system process focused tightly on the concept of bipolarity waltz s theory tends toward stasis the unit state level unproductively becomes an analytical dumping ground as a neoliberal counterpoint rosecrance s argument does not go far enough in the tradition of commercial liberalism he argues that an open trading system offers states maneuverability through economic growth rather than through military conquest he tempers his argument with realist considerations of prudence but fails to clarify realist liberal links in his theory or to explore fully the connections between power and non power incentives influencing states behavior a synthesis of neorealism and neoliberalism is warranted a systemic theory using the former to analyze at the level of structure the latter more often at the level of process

three s a crowd third parties and wto dispute settlement in spite of the recent failure of two referendums the drafting of a constitution for the second biggest economic power in the world the european union eu remains a major event in the history of european integration whether the constitution or a revised version of it will come into force or not several important questions emerge how did an increased number of twenty five member states reach a conclusion whereas a lower number of fifteen had failed at previous intergovernmental attempts in particular how did the constitutional convention differ from previous intergovernmental conferences igcs at which the eu exclusively bargained its treaty documents in the past how can one explain the outcomes of the convention which proposes redistribution of power and resources among twenty five or more member states this article uses the positions of the delegates of the eu s constitutional convention to examine bargaining in a setting with few formal rules the authors use theoretical insights from a spatial model and new survey data to determine the implicit voting rule used at the convention they find that the convention differed from previous igcs because the convention was governed by consensus whereas previous eu bargains on treaties had always required unanimous support the level of consensus was higher than simple majority rule but lower than unanimity since this threshold impacted who won and who lost at the convention the authors also examine the sources of bargaining power such as delegates distance to the status quo distance to the median population size and domestic constraints the results confirm several findings in the eu bargaining and two level game literature for example that actors closer to the status quo hold a stronger bargaining position and that actors from larger member states are neither more likely nor less likely to win at the negotiating table than are actors from smaller states the findings on the irrelevance of domestic constraints also indicate why the popular votes in france and the netherlands failed

tiny poor and war torn development policy challenges for east timor abstract following its decisive vote for independence on 30 august 1999 east timor will soon become the world s newest country the country has a particularly tragic history centuries of portuguese colonialism and neglect 24 years of troubled occupation by indonesia and the horrific violence and massive destruction of infrastructure which occurred in the wake of the 1999 vote for independence the country will start from one of the lowest points conceivable on the scale of socioeconomic development extremely low income very limited bureaucratic capacities barely functioning institutions and potentially hostile elements in its giant neighbor the formidable development policy challenges facing this new country are the subject of this paper

negotiating environmental agreements under ratification constraints abstract we analyze the impact of ratification constraints on the optimal terms of international environmental agreements ieas for this we combine the literature on ieas with the public choice literature on two level games by also incorporating uncertain preferences of the pivotal voter in the ratification stage we make several important contributions i we contribute to a more realistic modeling of the temporal structure of international agreements ii we show a surprising yet intuitive non monotonic relationship between the optimal commitment level and the variance of ratification decisions iii we identify reasons to expect a larger number of countries to join international negotiations than predicted by most of the coalition formation literature based on a representative agent model ratification constraints thereby can improve the welfare gains from stable international agreements

globalizing electoral politics political competence and distributional bargaining in the european union this article analyzes electoral cycles in distributional bargaining in the european union the author argues that governments attempt to increase their eu membership benefits above average levels in the preelection period hoping to appear politically competent to voters the theory discusses when and how eu members can increase these gains before elections through negotiations in the council of ministers a time series cross sectional analysis of eu member states annual budget negotiations from 1977 to 2006 supports the existence of conditional electoral cycles in distributional bargaining and generally points to the importance of accounting for such cycles when analyzing patterns of international cooperation

negotiation arithmetic adding and subtracting issues and parties students of international negotiations often examine strategic interactions among a given set of parties dealing with a specified group of issues the issues and parties themselves are often choice variables whose ultimate configuration can have decisive effects on a bargain s outcome using a variety of international cases i investigate the properties of several classes of moves that are intended to alter the issues and parties of an original negotiation a unified approach to the analysis of such situations suggests numerous distinct means by which the addition or subtraction of issues can yield one sided gains to the use of power can yield joint gains that create or enhance a zone of possible agreement and can reduce or destroy a zone of possible agreement the effects of adding or subtracting parties are similarly analyzed however unintended complexity unforeseen interrelationships organizational considerations transactions costs and informational requirements may alter the analysis of such moves

relative gains and the pattern of international cooperation many political situations involve competitions where winning is more important than doing well in international politics this relative gains problem is widely argued to be a major impediment to cooperation under anarchy after discussing why states might seek relative gains i demonstrate that the hypothesis holds very different implications from those usually presumed relative gains do impede cooperation in the two actor case and provide an important justification for treating international anarchy as a prisoner s dilemma problem but if the initial absolute gains situation is not a prisoner s dilemma relative gains seeking is much less consequential its significance is even more attenuated with more than two competitors relative gains cannot prop up the realist critique of international cooperation theory but may affect the pattern of cooperation when a small number of states are the most central international actors

building climate coalitions on preferential free trade agreements in this paper we discuss the endogenous formation of climate coalitions in an issue linkage regime in particular we propose a preferential free trade agreement on which a climate coalition should be built the basic idea is that the gains of free trade can provide strong incentives for countries to join the coalition as a framework a multi stage strategic trade model is employed in which each country may set an emission cap being effective on a permit market in addition a discriminatory import tariff may be imposed on dirty goods however at the heart of our approach is a preferential free trade arrangement among the members of a climate coalition leading to a favourable shift in the terms of trade as a main result trade liberalisation is found as an institution highly effective in building climate coalitions in particular the parametrical simulation of the model shows that participation in joint emission reduction is higher consumption patterns are more environmentally friendly and coalitional welfare is much more improved than in case of a single issue environmental agreement

what single voice european institutions and eu u s trade negotiations the member states of the european union eu have transferred their sovereignty over trade policymaking to the supranational level when entering into trade negotiations with third countries they must first reach a common bargaining position among themselves and later defend that position with a single voice at the international table how do the institutional rules through which the fifteen different voices are aggregated into a single one affect international outcomes differentiating between a conservative and a reformist negotiating context i argue that voting rules and negotiating competence in the eu determine both the probability that the negotiating parties conclude an international agreement and the substantive outcome of the negotiations the recent eu u s trade negotiations on agriculture public procurement and open skies are all evidence that for a given distribution of preferences internal eu institutional mechanisms affect the outcomes of international trade agreements

uncertainty and ratification failure i study a game where two agents bargain on an agreement to replace the status quo for their agreement to come into effect they need the approval of a third agent the preferences of this third agent is private information but there is communication among agents i study this game in the context of international agreements to provide an explanation for involuntary ratification failures i show that under certain assumptions the informational deficiency is incurable due to incentives to misrepresent preferences and that a parliament whose majority is more hawkish than their executive prefers the executive to be risk averse

power and interdependence revisited ten years ago we published power and interdependence 1 the passage of a decade makes this an appropriate time to reread and reevaluate that book and to take stock of the research program to which it contributed in doing this we hope to deepen and enrich scholarly understanding of the politics of interdependence and to stimulate reflection on directions for the field of international relations over the next decade 2 such a reappraisal seems particularly opportune given the changes in world politics and especially in american policy that have marked the intervening years stanley j michalak commented in 1979 that the authors may cringe from the analogy but power and interdependence may well become the politics among nations of the 1970s 3 but from the perspective of the late 1980s the world may look different while the 1970s were seen as the decade of interdependence many observers regard the use of force and concern for security as characteristic of the 1980s indeed the view is widespread in some circles that the 1980s resemble the 1950s more than the 1970s and that hans j morgenthau s work is more relevant to contemporary issues of world politics than power and interdependence

the effects of structures and power on state bargaining strategies when and why will states adopt more or less cooperative bargaining strategies standard answers to this question focus on the role of state power other scholars highlight socialization effects i argue that in most international negotiations the institutional bargaining structure will mitigate the effects of power and socialization and drive state bargaining behavior factors highlighted by formal models of international bargaining should therefore best explain the variation in the strategies states adopt i introduce empirical measures of these abstract concepts and test their effects against those of power and socialization using an original dataset of state bargaining strategies in the european union eu the results show that structural factors best explain variation in the eu states bargaining strategies i conclude by highlighting the conditions under which these effects should explain state bargaining behavior in other international negotiations and discuss the implications of this argument for the study of international bargaining

electoral cycles and international policy cooperation abstract this paper analyzes the interaction between domestic politics and international policy coope ration as a two level repeated prisoners dilemma at the domestic level two party competition generates an electoral cycle in monetary growth inflation and real output at the international level the policymakers desire to promote domestic expansion by depreciating the currency gives rise to an inflationary bias in monetary growth a move towards international cooperation reduces the inflationary bias but may increase the amplitude of the electoral cycle moreover international cooperation may not be desirable for one of the domestic parties nevertheless domestic and international cooperation may be jointly sustained by the credible threat of a reversion to the regime under which the destabilizing effect of domestic politics is at a maximum

international technology oriented agreements to address climate change much discussion has surrounded possible alternatives for international agreements on climate change particularly post 2012 among these alternatives technology oriented agreements toas are perhaps the least well defined we explore what toas may consist of why they might be sensible which toas already exist in international energy and environmental governance and whether they could make a valuable contribution to addressing climate change we find that toas aimed at knowledge sharing and coordination research development or demonstration could increase the overall efficiency and effectiveness of international climate cooperation but are likely to have limited environmental effectiveness on their own technology transfer agreements are likely to have similar properties unless the level of resources expended is large in which case they could be environmentally significant technology specific mandates or incentives could be environmentally effective within the applicable sector but are more likely to make a cost effective contribution when viewed as a complement to rather than a substitute for flexible emissions based policies these results indicate that toas could potentially provide a valuable contribution to the global response to climate change the success of specific toas will depend on their design implementation and the role they are expected to play relative to other components of the policy portfolio