Geoffrey HalePolitical Science 3170

University of LethbridgeSeptember 24, 2010

Game Theory and International NegotiationsBasic concepts“Win-sets”, negotiating room, and negotiating

leverageMaking agreements “stick”

Voluntary and involuntary defectionFactors affecting “win set” sizeWhy it matters

Examples and applications

Basic Concepts: Two-Level GamesTheory holding that international negotiations involve

bargaining on at least two levelsbetween or among national governments, andbetween government leaders (or negotiators) and other

domestic political actors including actors within their own governments and/or actors among relevant societal groups.

Successful negotiations require:agreement between negotiators / countries on the basis

of mutual (but not necessarily equal) benefit; capacity of each government secure internal ratification

of the agreement according to its relevant (private or public) political processes.

Basic Concepts: Two-Level GamesLevel 1 Game

Country “A” Country “B”Political leader ---------------------- Political leaderand senior advisors and senior advisors

| |Level 2 Game Level 2 GameCountry “A” Country “B”Political leader / sr. negotiator Political leader / sr. negotiator+++++++++++++++++++++++ ++++++++++++++++++

+++Internal political / b’cratic actors Internal polit. / b’cratic

actors+++++++++++++++++++++++ ++++++++++++++++++

+++External political / societal actors External political / societal

actors(supportive / conditional / opposed) (supportive / conditional / opposed)

Key assumptionsStates are not unitary actors in negotiations

Negotiators’ preferences, bargaining conditions are not fully transparent

ImplicationsCritical to have understanding of other parties’

negotiating contexts, priorities, especially in multi-party negotiations. (Easier said than done.)

Key Assumptions IIStates are not unitary actors in negotiations

Negotiators’ preferences, bargaining conditions are not fully transparent

Bargaining environment may be dynamic subject to change based on external political or

policy environments for negotiations, or based on internal dynamics (winners / losers / unforeseen issues) of negotiations themselves.

ImplicationsNegotiations not “over” until everyone agrees.Agreement does not necessarily imply

ratification.

Key assumptions IIINegotiators may use bargaining dynamics to influence their

own domestic actors BUTDomestic political institutions play vital role in structuring

internal dynamics of initiating, conducting, and/or ratifying international institutions. Ratification processes may be formal, public OR private,

internal to government (or branches of government) OR combination of both

Implications:Usually multiple agendas present at bargaining table.Negotiations may involve element of “bluff” involving

leaders’ capacity to mobilize domestic support, overcome opposition (internal and external).

Political leaders with greater domestic autonomy may be at relative disadvantage compared with more politically constrained negotiating counterpart.

Key assumptions IV States are not unitary actors in negotiations

Negotiators’ preferences, bargaining conditions are not fully transparent

Bargaining environment may be dynamic subject to change based on external political or policy

environments for negotiations, or based on internal dynamics (winners / losers / unforeseen issues) of negotiations themselves.

Negotiators may use bargaining dynamics to influence their own domestic actors BUT

Domestic political institutions play vital role in structuring internal dynamics of initiating, conducting, and/or ratifying international institutions.

Domestic actors in each country may attempt to take prior or ongoing political actions to change terms on which negotiators are likely to be able to ratify any agreement.

“Win-sets”The collection or set of agreements among

negotiators that would obtain ratification by their respective constituents in an “up-or-down” vote.

Win-sets for each “Level 1” party must overlap

The smaller the win-sets for each party, the greater the likelihood that negotiations will break down.

“Win-sets” IIThe collection or “set” of agreements among

negotiators that would obtain ratification by their respective constituents in an “up-or-down” vote.

Win-sets for each “Level 1” party must overlap to some degree

The smaller the win-sets for each party, the greater the likelihood that negotiations will break down.

“Win-sets” IIIThe relative size of each country’s “win-sets” will affect

the distribution of the joint gains from the international bargain.\

Negotiators with smaller win-sets can use risk of non-ratification to shape process of negotiation, extract more concessions from countries with larger “win-sets”Size of win-sets may be shaped by government’s

relative autonomy from domestic political interests, perceived gains from agreement vs. non-agreement, perceived costs of not securing agreement.

 Xm-------------[--------[--------]-------[---------------Ym Y1 Y2 X1 Y3

 Max. possible Max. possible gains for X gains for Y

“Win-sets” IVScope of negotiations will affect size of “win-

sets”Broad negotiations among relatively limited

number of parties increases potential for trade-offs, bargains leading to agreements.

The growing in the number of negotiating parties increases the difficulties in achieving agreement on large-scale agreements Multi- or plurilateral agreements more likely to be

achievable on more narrowly focused issue clusters (fewer ‘external’ linkages)

Explains specialization, decentralization of international economic institutions

Key factors affecting size of “win-sets”“Level 2” Preferences and CoalitionsDistribution of political, societal interests actively

or conditionally in favour of, opposed to potential agreement relative size of enthusiastic “internationalist” coalition

vs. resolutely “nationalist” or “isolationist” coalitions relative homogeneity vs. diversity of domestic

interests potentially affected.interests may exist independently in each country or

cooperate across national borders.Relative intensity of coalitions likely to gain or lose

from agreement.Capacity of governments to negotiate trade-offs to

neutralize or reconcile potential opponents

Key factors affecting size of “win-sets”“Level 2” Preferences and Coalitions II“The lower of the costs of non-agreement

(status quo) to constituents, the smaller the ‘win sets’”More self-sufficient states usually have lower

costs of non-agreement than trade dependent states.

If political influence of supporters, opponents relatively equal, political contest may be determined by relatively unaligned groups “in the middle”.

Key factors affecting size of “win-sets”“Level 2” InstitutionsHow transparent?

Secrecy may be advantage – but only if societal ratification of secondary importance to outcomes.

Consultation may be vital for mobilization of / validation of outcomes by key stakeholder groups.

Key factors affecting size of “win-sets”“Level 2” Institutions IIWho has veto points, and at what stages of

process?Centrality of “Fast Track / Trade Promotion

Authority” in securing ratification by U.S. Congress Support still requires support from key Congressional

leaders, often on both sides of House, Senate. Differences between “Treaty”, “Executive Agreement”

Importance of provincial support as “cover” for federal trade negotiations in Canada.

The stronger the autonomy of a (democratic) state, the weaker its international negotiating position.

Key factors affecting size of “win-sets”Level I Negotiators’ StrategiesManagement of domestic expectations, fears

key factor in balancing leverage on negotiating partner(s) with capacity for ratification.

Total gains / losses from negotiations often less important than their distribution among actual and potential coalitions of supporters and opponents.

Negotiations more likely to succeed when negotiators “collude” in managing relative costs and benefits of potential agreement.

Managing “game breakers”,risks of “defection”Uncertainty, inadequate political / technical research

often critical factors in managing negotiations.Negotiators often “bluff” in order to convince

counterparts that their “win-sets” or “kinky” – reflecting limited capacity to sell compromises past specific point.

Involuntary defection – a negotiator or leader is unable to secure ratification of an agreementMay result from informal political processes (being

overruled by political superiors or colleagues) or formal political processes (legislative or electoral defeat).

e.g. Negotiations with U.S. government subject to ratification by Congress with independent powers, multiple veto points empowered by decentralized decision-making system.

Managing “game breakers”,risks of “defection” IIVoluntary defection – the reneging on a bargain

by a “rational egoist” in the absence of enforceable contracts.Less likely when likelihood of repeated negotiations

on different subjects creates incentives for the cultivation of trust among political and bureaucratic actors.

Good faith may be reinforced by potential for political, diplomatic or economic costs.

Summary“Two-level” game theory provides general

model for analysis of international negotiationsBUT – use as predictive model depends on the

number of separate factors, actors involved in negotiations, ratification AND

Capacity of negotiators, policy analysts to identify accurately the key members of stakeholder coalitions, their priorities and conditions for ratification in highly dynamic, uncertain game.