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A Bargaining Model of Domestic Politics and the Cost of War
Unformatted Document Text:  Morrow (1989) and Fearon (1995) produced what are among the most influential papers on bargaining and war, perhaps because both point to crucially important elements of the bargaining model that imply challenges for the scholarly community. Morrow argues that bargaining models imply strategic selection and the importance of beliefs. These collectively produce an empirical challenge to model strategic, non-random selection and to measure elements of beliefs; both of these pose significant empirical difficulties. Fearon argues that rationalist models inadequately deal with the problem that both sides in bargaining have incentives to misrepresent themselves (principally their capabilities), thus increasing the chances states disagree over the distribution of power and thus, the chances of war. The challenge to scholars of conflict is to devise theoretical mechanisms by which states can solve this problem and arrived at negotiated solutions, avoiding the outside option of war. Jointly, these challenges have shaped much of the literature on bargaining and war. It is still the case, however, that empirical evaluations of the bargaining model are relatively infrequent due mainly to the observability problem. For instance, if a challenger’s beliefs about a defender’s costs for war are influential in determining whether the challenger makes a demand and the size of the demand, empirical models would require measures of those beliefs, and of the nature of demands. Further, despite significant development of signaling arguments that suggest answers to Fearon’s challenge, the literature is troubled by the out- break of war and the inability of states to find mutually preferred negotiated outcomes. So even when states can signal by tying hands or sinking costs, war still occurs. We propose another pathway by which conflict occurs, specifically that states’ leaders are uncertain about each others’ abilities to maximize, or more simply, about their opponents’ levels of rationality. The standard economic bargaining model and the same model with respect to war assume actors are completely rational, and that they believe each other to be completely rational. It might be the case, however, that markets and war differ in one particularly critical way such that the direct transfer of the economic model cannot ade- quately represent the nature of international conflicts. That difference is in the frequency 4

Authors: Clark, David., Holt, Charles., Nordstrom, Timothy., Reed, William. and Sieberg, Katri.
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Morrow (1989) and Fearon (1995) produced what are among the most influential papers
on bargaining and war, perhaps because both point to crucially important elements of the
bargaining model that imply challenges for the scholarly community. Morrow argues that
bargaining models imply strategic selection and the importance of beliefs. These collectively
produce an empirical challenge to model strategic, non-random selection and to measure
elements of beliefs; both of these pose significant empirical difficulties. Fearon argues that
rationalist models inadequately deal with the problem that both sides in bargaining have
incentives to misrepresent themselves (principally their capabilities), thus increasing the
chances states disagree over the distribution of power and thus, the chances of war. The
challenge to scholars of conflict is to devise theoretical mechanisms by which states can solve
this problem and arrived at negotiated solutions, avoiding the outside option of war.
Jointly, these challenges have shaped much of the literature on bargaining and war. It
is still the case, however, that empirical evaluations of the bargaining model are relatively
infrequent due mainly to the observability problem. For instance, if a challenger’s beliefs
about a defender’s costs for war are influential in determining whether the challenger makes
a demand and the size of the demand, empirical models would require measures of those
beliefs, and of the nature of demands. Further, despite significant development of signaling
arguments that suggest answers to Fearon’s challenge, the literature is troubled by the out-
break of war and the inability of states to find mutually preferred negotiated outcomes. So
even when states can signal by tying hands or sinking costs, war still occurs.
We propose another pathway by which conflict occurs, specifically that states’ leaders are
uncertain about each others’ abilities to maximize, or more simply, about their opponents’
levels of rationality. The standard economic bargaining model and the same model with
respect to war assume actors are completely rational, and that they believe each other to
be completely rational. It might be the case, however, that markets and war differ in one
particularly critical way such that the direct transfer of the economic model cannot ade-
quately represent the nature of international conflicts. That difference is in the frequency
4


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