Trustees of Princeton University Explaining Cooperation under Anarchy: Hypotheses and Strategies Author(s): Kenneth A. Oye Source: World Politics, Vol. 38, No. 1 (Oct., 1985), pp. 1-24 Published by: Cambridge University Press Stable URL: http://www.jstor.org/stable/2010349 . Accessed: 20/09/2011 21:10 Your use of the JSTOR archive indicates your acceptance of the Terms & Conditions of Use, available at . http://www.jstor.org/page/info/about/policies/terms.jsp JSTOR is a not-for-profit service that helps scholars, researchers, and students discover, use, and build upon a wide range of content in a trusted digital archive. We use information technology and tools to increase productivity and facilitate new forms of scholarship. For more information about JSTOR, please contact [email protected]. Cambridge University Press and Trustees of Princeton University are collaborating with JSTOR to digitize, preserve and extend access to World Politics. http://www.jstor.org EXPLAINING COOPERATION UNDER ANARCHY: Hypothesesand Strategies By KENNETH A. OYE* I. INTRODUCTION N ATIONS dwell in perpetualanarchy, for no centralauthority imposes limitson the pursuitof sovereigninterests. This common condition gives rise to diverse outcomes. Relations among states are marked by war and concert,arms races and arms control,trade wars and tarifftruces, financial panics and rescues,competitive devaluation and monetarystabilization. At times, the absence of centralized inter- national authorityprecludes attainmentof common goals. Because as states,they cannot cede ultimatecontrol over theirconduct to an supra- national sovereign, they cannot guarantee that they will adhere to their promises. The possibilityof a breach of promise can impede co- operationeven when cooperationwould leave all betteroff. Yet, at other times, states do realize common goals through cooperation under an- archy.Despite the absence of any ultimateinternational authority, gov- ernmentsoften bind themselves to mutually advantageous courses of action. And, though no internationalsovereign stands ready to enforce the terms of agreement,states can realize common intereststhrough tacit cooperation,formal bilateral and multilateralnegotiation, and the creation of internationalregimes. The question is: If internationalre- lations can approximateboth a Hobbesian stateof natureand a Lockean civil society,why does cooperation emerge in some cases and not in others?' The contributorsto this symposium address both explanatoryand prescriptiveaspects of this perennial question. First,what circumstances favor the emergenceof cooperationunder anarchy? Given the lack of a * I am gratefulfor commentsby JeffFrieden, Ralph Ginsberg,Joanne Gowa, Stephen Krasner,David Lake, Timothy McKeown, Paul Quirk, ArthurStein, and the other con- tributorsto this volume. The essays presentedhere focus on nation-statesas primaryactors in world politics, treat national preferencesas sovereign,and assume that any ultimateescape from inter- nationalanarchy is unlikely.Our focusis on non-altruisticcooperation among statesdwelling in internationalanarchy. 2 WORLD POLITICS centralauthority to guaranteeadherence to agreements,what features of situationsencourage or permitstates to bind themselvesto mutually beneficialcourses of action?What featuresof situationspreclude co- operation?Second, what strategies can statesadopt to foster the emergence of cooperationby altering the circumstances they confront? Governments need not necessarilyaccept circumstances as given.To whatextent are situationalimpediments to cooperationsubject to willfulmodification? Throughwhat higher order strategies can statescreate the preconditions forcooperation? The problemof explainingand promotinginternational cooperation encompassesmany of the principal questions in thedisciplines of political economyand securitystudies. However, divergent terminological con- ventionsand substantiveapplications have impededthe comparisonof answers.In the essayspresented here, a unifiedanalytic framework, derivedfrom elementary game theoryand microeconomics,has been superimposedon cases in internationalsecurity and economicaffairs. This use of theaustere abstractions of game theoryand microeconomics offersseveral advantages.2First, superficial differences often obscure the parallelismof questions,explanations, and prescriptionsin the two fields. By reducing concepts to fundamentals,the use of elements of game theory and microeconomics permits ready identificationof parallels. Second, intrinsicdifferences between the politicsof war and the politics of wealth and welfare may give rise to divergent explanations and prescriptions.A unified analytic frameworkfacilitates explicit recogni- tion of differencesin the extent and causes of, and prospects for, co- operation in securityand economic affairs.Finally, uneven intellectual developmentmay give rise to divergentexplanations and prescriptions. A unified analytic framework fosterstransference of useful concepts between the fields.3 In this introductoryessay, I submit that three circumstantialdimen- sions serve both as proximateexplanations of cooperationand as targets 2 In this essay, I use elementarygame theoryin a purely instrumentalfashion. First, although some referencesto the formalliterature are provided,the text does not furnish formalproofs on the existenceor location of equilibrium points in differentcategories of games. As Thomas Schelling notes, the equilibrium solutions identifiedby formal game theoristsmay stabilizeconvergent expectations among mathematicians,but unless equilibria can also be reached through"alternative less sophisticatedroutes," such solutionsmay have littleinfluence on internationaloutcomes. See Schelling,The Strategyof Conflict(London: Oxford UniversityPress, i963), II3-I4. Accordingly,the contributorssearch for "alternative less sophisticatedroutes" to reach mutuallybeneficial equilibrium points and for simple strategiesto restructuresituations to create mutuallybeneficial equilibrium points. 3 For an extendeddiscussion of the uses and abuses of game theoryin the empiricalstudy of internationalpolitics, see Duncan Snidal, "The Game Theoryof InternationalPolitics," in this collection. EXPLAINING COOPERATION UNDER ANARCHY 3 of longer-termstrategies to promotecooperation. Each of the threemajor sectionsof this piece definesa dimension,explains how that dimension accounts for the incidence of cooperation and conflictin the absence of centralized authority,and examines associated strategiesfor enhancing the prospectsfor cooperation. In the section entitled "Payoff Structure: Mutual and Conflicting Preferences,"I discuss how payoffsaffect the prospectsfor cooperation and present strategiesto improve the prospectsfor cooperation by al- teringpayoffs. Orthodox game theoristsidentify optimal strategiesgiven ordinally defined classes of games, and their familiar insightsprovide the startingpoint for the discussion.4Recent works in securitystudies, institutionalmicroeconomics, and internationalpolitical economy sug- gest strategiesto alter payoff structures and therebyimprove the prospects for cooperation.5 In the next section,entitled "Shadow of the Future: Single-playand Iterated Games," I discuss how the prospectof continuinginteraction affectsthe likelihood of cooperation;6examine how strategiesof rec- iprocitycan provide directpaths to cooperativeoutcomes under iterated conditions;7and suggeststrategies to lengthenthe shadow of the future.8 In addition,this section shows thatrecognition and controlcapabilities- the ability to distinguishbetween cooperation and defectionby others 4For the definitiveclassification of ordinallydefined games, see Anatol Rapoport and Melvin Guyer, "A Taxonomy of 2 X 2 Games," GeneralSystems ii (i966), 203-I4. For an extended reinterpretationof crisis bargaining in light of payoffstructures, see Glenn H. Snyder and Paul Diesing, ConflictAmong Nations: Bargaining,Decisionmaking, and System Structurein InternationalCrises (Princeton: Princeton University Press, I977). 5 For examples, see Robert Jervis,"Cooperation under the SecurityDilemma," World Politics30 (JanuaryI978), i67-214; Oliver E. Williamson, "Credible Commitments:Using Hostages to SupportExchange," American Economic Review (September i983), 5I9-40; John Gerard Ruggie, "InternationalRegimes, Transactions, and Change: Embedded Liberalism in the Postwar Economic Order," in Stephen D. Krasner,ed., InternationalRegimes (Ithaca, N.Y.: Cornell University,Press, i983). 6For orthodox game-theoreticanalyses of the importanceof iteration,see R. Duncan Luce and Howard Raiffa,Games and Decisions(New York: Wiley, I957), Appendix 8, and David M. Kreps, Paul Milgram,John Roberts, and RobertWilson, "Rational Cooperation in Finitely-RepeatedPrisoner's Dilemma," Journalof Economic Theory27 (August i982, 245-52. For the resultsof laboratoryexperiments, see Robert Radlow, "An Experimental Study of Cooperation in the Prisoner's Dilemma Game," Journalof ConflictResolution 9 (Junei965), 22I-27. On the importanceof indefiniteiteration to theemergence of cooperation in business transactions,see Robert Telsor, "A Theory of Self-EnforcingAgreements," Journalof Business53 (Januaryi980), 27-44. 7On how iteratedPrisoners' Dilemmas environmentsliterally select for Tit-for-Tat strat- egies, see Robert Axelrod, The Evolutionof Cooperation(New York: Basic Books, i984). For a formal statementon the effectsof reciprocityon equilibrium outcomes in iterated games, see Drew Fudenberg and Eric Maskin, "The Folk Theorem in Repeated Games