/ Jn: E Ke : Oye ? Kenweth (sol) EXPLAINING COOPERATION a i ; ' UNDER ANARCHY: Coo, eopareah 6nd Unde Hypotheses aid Strategies * Anan by KENNETH A, OYE* Arranchy Fun clon Onion " ' , 1. Introbuctio’ Ms 44 BG Nees, dwell in perpetual anarchy, for no central authority - imposes limits on the pursuit of sovereign interests, This common _° en condition gives rise to diverse outcomes. Relations among states are 1 marked by war and concert, arms races and arms control, trade wars and tariff truces, financial panics and rescues, competitive devaluation : it 4 fand monetary stabilization. At times, the absence of centralized inter- ° national authority precludes attainment of common goals. Because as ota ance they ean cede ulimate control over thet condt can Supra mnal sovereign, they cannot guarantee that they will adhere to + their promises lity of « breach of. promise.can impede co: operation eve super off. Yet, at other Times, states do realize common goal jon under an- ) EX TO (3 Srchy, Despite the absence of any ultimate ‘international authority, 20¥- : ernments often bind themselves to mutually advantageous courses, of “Faion, And, Though fo Tternational sovereign stands ready to enforce the terms of ageeement, states can realize common intertsts through tacit cooperation, formal bilateral and multilateral negotiation, ind the creation of international regimes. The quéstion, is: If Fe} ys lations can approximate both a Hobbesian state of nature and a Tock X ' se eciegy why dart eonperation emerge in some cases and not in| othenst= , ; ‘The contributors to this symposium address both ekplanatory and prescriptive aspects of this perennial question. First, what cireumstancer 0 favor the emergence.of coopers ider anarchy? Given the lack of a acest Ba a nw a tae a fem ere focus om nain-tates 36 primary acters in work ee erally Our foes on rotate canperation among aes dveling in international snare.2 OYE PLAINING COOPERATION UNDER ANARCHY — 3 central authority to guarantee adherence to agreements, what features of longer-term strategies to promote cooperation, Fach of thé three majo, of situations encourage or permit states to bind themselves to mutually “sections of this piece defines» dimenty, ‘aplains how that dimension beneficial courses of action? What features of situations preclude co- jaecounts for the incidence of coopeatoy and confi in the absence of ‘operation? Second, what strategies can states adopt to foster the emergence sialic AURUTIG, aNd GRAMME AWociated strategies for enhancing) CRAM AUTOciated stratepies for ¢ © of cooperation by altering the rooms hey ake? ‘Governments athe prospects for cooperation: aay wa a IF accepe cicuisstaees as given. To what extent arc in the secion EAGIET" Payoff Structure: Mutual and Conflicting situational impediments to cooperation subject to willful modification? references,” I discuss how payoffs affect the prospects for cooperation ‘Through what higher order strategies can states create the preconditions 8 and present strategies 10 proapats For. cooperation. By-al- for cooperation? tering payoffs, Orthodox game theorists identify optimal strategics given ‘The problem of explaining and promoting international cooperation cain finally defined classes of games, and their familiar insights provide security studies, institutional microeconomics, and international political economy sug- est strategies toalter payoff structures and thereby improve the prospects encompasses many of the principal questions in the disciplines of political y \0} the starting point for the discussions Recent works i economy and security studies. However, divergent terminological con- ventions and substantive applications have impeded the comparison of answers, In the essays presented here, au : sd analytic framework, for cooperation? Geulit'¢ ( derived Brom elementary game theory and microeconomics, has beet In the next section, entitled “Shadow of the Future: Single-play and farsa superimposed_on cases in int curity, and ccanomic. affairs, Iterated Games,” I discuss how the prospect of continuing interaction is use of the austere abstractions of game theory and microeconomics affects the likelihood of cooperation ® examine how strategies of rec offers several advantages.’ First, superficial differences often obscure the iprocity-can. provide direct paths t edoperat omes under erated parallelism of questions, explanations, and prescriptions inthe two fields. (U) | conditions,” and suggest strategies to Fengthen the shadow of the future.* . By reducing concepts to fundamentals, the use of elements of game tq) © |In addition, this section shows that recognition and control capabilities— theory and microeconomics permits ready identification of parallels. GY che ability to distinguish between cooperation and defection by others vnveyrmey Second, intsnsc differences bebwsen thepolitico. war andL she. polis Coe wvalivertoq oof wealth and welfare may give rise to divergent explanations. anc af wealth Ke _fise 10, dive - Por the defistine asfction of ordinal defined game, sce Anatol Rapoport and “\prseripaans % unified ain Tramiework facilitates explicit recogni- Melvin Guyer, "A Taronmy of x 2 Gres” Gene Sens 196), 205-14 Foran TOR of differences in the extent and causes of, and prospects for, co- pended sinienprtion of ris bargaining in Uh of puyol auc ac Cleon I F differences 2 Snyacr ad Paul Dising, Conc Anong Neon: Bargaining. Dechinmating, and Sem ‘operation in security and economic affairs. Finally, uneven intellectual Sorser and au Dicsing Cont Aone ene party Beas ae velopment imay gre rise to divergent explanations ani ns. “Tor examples, st Rober Jeri “Cooperation under the Sect Daemma,” World a le pment may ie ie sean captain n Peemeents Politics o (anus gh ery Olver Eilon “Geile Commies: Ung unified an otk, fosters. nce. of ssful.concepss . Henoges to Support Exchange Americn Economie Revew September 1983) 19-405 fn Saween the Gerard Ruggielnternatigal Regimes Transactions, and Change: Embedsed berlin Tin this introductory essay, I submit that three circumstantial dimen- ithe Fomwar coment Qréey ix Seen Ds Kener, ea lretonal Regimes (haem sions serve both as proximate explanations of cooperation and as targers For tlaaon paneer tive ofthe importa of iosaton aR: Duncan Lace nl How Rai Ce ed iio’ ek Wh penn ad +n chis essay, I use elementary game theory in 2 pusly instrumental fashion, Fiet Danid M, Kreps, Paul Milgram hn Rob an a emome: Theoy ay (Acme gee, in Fiitely-Repeated Prisoners Dilemins” Journal of Economie Theory 27 (Augen 1983, 45-52. For the results of laboratory experiments, see Rebert Radlow, “An Experimental Stay of Cooperation inthe Prisoner's Dilemma Game,” Journal of Confit Resolution 9 (iane 1965), 231-27. On the importence of indefinite iteration to the emergence of cooperation ‘in business transactions, see Robert Telsr, "A Theory of Sell-Enforcing Agreements,” ahhh some referees to the fra tr re ponded he et docs nt fra formal pools onthe extence or location of equivary points in diferent categories of ames fs Thomas Schling notes the equim solutons identified by formal ge {Rote may subize convergent expectations among mathematicians but uns equi arva beveached throug tera lee sphaeated routs,” such roluione may have ual of Busnes ous eh) 2 ite om ttl sce ling, TheSey of Conf (Cnn Jon hom tested Prseners Diets evronments trl select for Titfor-Tt wet Or Unnray Dre) 851. Aci the cabs earch ox aerate une Hebe hac The Fohton 9 Coopoution {New York ae Tk lew whined sot JW ually orci equiva: pins ad for simple FA Eee ae eee een Gasibrumn ateones I terete sug ehuuctre stuns we crete tel Bsc qui pa ines see Drew Fusenberg and Erie Maskin, "The Folk Theorem in Repested Games ‘rth Discounting snd plete Information," Econometnen, forthcoming. "On enhancing ferativeness through decomposition of payolfe overtime, see Schelling (Goa), 446, and Axelrod (i. 7), 136-32, "Por an extended discussion ofthe uses and abu ot ernational politi, see Duncan Sn tn thie clletion agave chy Hote cpr a oe Theory of laternatinal Plies ee EES PE PT TT4 ove and to respond in kind—can affect the power of reciprocity, and suggests strategies to improve recognition capabilities? In the third section, "Number of Players: Two-Person and N-Person Games," Lexplain why cooperation becomes more difficult as the number actors increases; present strategies for promoting cooperation in N- actor situations; and offer strategies for promoting cooperation by re- Gucing the number of actor Recessary to the realization of cominion incerests Game theorist and oligopoly theorists have long noted that cooperation becomes more difficult as numbers increase, and their in- sights provide a starting point for discussion.» Recent work in political ‘economy focuses on two strategies for promoting cooperation in thorny N-person situations: functionalist analysts of regimes suggest strategies for increasing the likelihood and robustness of cooperation given large numbers of actors" analysts of ad hoc bargaining in international po- litical economy suggest strategies of bilateral and regional decomposition ‘of some mutual interests, at the expense of the magnitude of gains from cooperation.” Each of the three circumstantial dimensions serves both as an expla- nation of cooperation and asa target of strategies to promote cooperation. ‘The concluding section of this essay provides a roadmap to our efforts to test these preliminary explanations and strategies. By applying this common analytic framework to cases in economic and security affairs and by searching for explicit parallels and differences in the incidence, causes, and prospects for cooperation, the authors hope to contribute to 1 deeper understanding of international cooperation. Tl, Pavorr Srructune: Muruat ap Conrictine PREFERENCES ‘The structure of payofls in a given round of play—the benefits of mutual cooperation (CC) relative to mutual defection (DD) and the benefits of unilateral defection (DC) relative to unrequited cooperation (CD)—is fundamental to the analysis of cooperation. The argument Ibid 13948 ee yA Shubik, Games for Soi, Bain and War Towards A They of Gaming (ew Yorks Ebene ops Fors formal statement the importace of the mumber of {ayers to eeopertios in erated games, se Fudenberg and Maskin (2) Se Retet:Keahane, der ogesny Cooperation and Dior nthe Weld Political Foonaiy Wincto: Pesncton Uaiversy Pres, ta ana Krasner (0.5) "EE in ony, atonal Oagaion ad te Theo of Proper Right fversasional Grain 3 Saroner 18), 307-34, and Kenge As Ope, “Heli Syucns, Berguining, snd Breakdown: International Plies! Beonomy 1929-1936" Ph.D. dhs acer Unica, 1083) hep 5. EXPLAINING COOPERATION UNDER ANARCHY 5 roceeds.in three stages. First, how do . nica ‘cooperation? More narrowly, when is cooperition, defined in terms of conscious policy coordination, necessary to the realization of mutual interests? Second, how does payoff structure affect the lihood and robustness oF cooperation? Third, through what strategi can_states, increas a the lire pspedisTor-oopersion By aTCEI. payoff structures?, Before turning to these questions, consider briefly some tangible and intangible determinants of payoff structures. The security and political economy literatures examine the effects of military force structure and doctrine, economic ideology, the size of currency reserves, macro- economic circumstance, and a host of other factors on national assess- ments of national interests. In “Cooperation under the Security Di- lemma,” Robert Jervis has explained how the diffusion of offensive military technology and strategies can increase rewards from defection and thereby reduce the prospects for cooperation. In “International Re- gimes, Transa 1s, and Chance: Embedded Liberalism in the Postwar Economic Order,” John Ruggie has demonstrated how the diffusion of liberal economic ideas increased the perceived benefits of mutual eco- nomic openness over mutual closure (CC-DD), and diminished the perceived rewards from asymmetric defection relative to asymmetric cooperation (DC-CD). In “Firms and Tariff Regime Change,” Timothy McKeown has shown how downturns in the business cycle alter national tastes for protection and thereby decrease the perceived benefits of mu- tual openness relative to mutual closure and increase the perceived rewards of asymmetric defection.” In the present symposium, ideological and cognitive determinants of national preferences are emphasized in Stephen Van Evera's essay on the origins of the First World War and Kenneth Oye’s chapter on monetary conflict during the 1930s. Robert Jervis’s essay on the emer- gence of concert following systemic wars clucidates international struc- tural determinants of payoffs. John Conybeare’s comparative study of trade wars, Kenneth Oye’s study of monetary conflict in the 19308, and Charles Lipson’s study of bankers’ dilemmas examine macroeconomic determinants of payoff structure. George Downs, David Rocke, and Randolph Siverson investigate domestic structural determinants of pay- off structure in their essay on cooperation in arms races. Payoff structure cal and, 34 Rae 5h Timo J Meeonm “Fm ad Taf Regime ange: Explaining the Demand for Protection,” Worl Poitier 36 Yamoary 198), 295-33 nth feat of preference on the pope eoprton, he concn sections of ferve(l. 3)