You are viewing this abstract at the Political Methodology Working Paper Archive at UC-Riverside. Click Here to view the Postscript version. Click Here to retrieve paper archive file. This paper examines the impact of dispute settlement institutions on the outcome of international conflicts.
Realists contend that such institutions are epiphenomenal to underlying power relationships.
Neoliberals argue in contrast that institutions make cooperation more likely by clarifying obligations and reducing transaction costs. The evidence highlights a selection effect, in which cooperation is more likely at earlier stages of institutional escalation than after the adjudication is complete. To address this question, the paper introduces an incomplete information model of international bargaining and escalation within the context of a dispute settlement institution. The model generates a number of surprising and powerful results. First, even defendants who do not fear unfavorable rulings will be more likely to plea bargain in equilibrium because of the dispute settlement institution.