Credibility and Flexibility: Political Institutions,Governance, and Foreign Direct Investment

This article argues that the relationship between political institutions and foreign direct investment is both nonlinear and conditional upon status quo policies. The empirical analysis demonstrates an inverted U-shaped relationship between political institutions and foreign direct investment in developing countries, with four veto players being the most attractive institutional arrangement. Countries with too few or too many veto players are not favored because of either high policy uncertainty or high policy rigidity. In addition, the benefits and costs of credibility and flexibility vary in good times and hard times. The benefits of maintaining status quo tend to outweigh the costs in countries with good initial regulatory environment. The costs of maintaining status quo tend to outweigh the benefits when countries are more vulnerable to exogenous shocks.     

Economic Interdependence and the Balance of Power

To account for variance in great powers responses to threats and the implications for the peacefulness of the international system since the late nineteenth century, this article elucidates a theory which refines and synthesizes economic liberal perspectives and realist balance of power theory. I argue that different patterns and levels of economic interdependence in the great power system generate societal-based economic constraints on, or incentives for, state leaders of status quo powers hoping to mobilize economic resources and political support to oppose perceived threats. This mobilization process influences strongly the preferences of status quo powers, other states beliefs about those preferences, and the interpretation of signals in balance of power politics. In this way, economic ties influence the strategies great powers pursue. Firm balancing policies conducive to peace in the international system are most likely, I then hypothesize, when there are extensive economic ties among status quo powers and few or no such links between them and perceived threatening powers. When economic interdependence is not significant between status quo powers or if status quo powers have strong economic links with threatening powers, weaker balancing postures and conciliatory policies by status quo powers, and aggression by aspiring revisionist powers, are more likely. I then illustrate how these hypotheses explain the development of the Franco-Russian alliance of the 1890s and its effectiveness as a deterrent of Germany up to 1905, British ambivalence toward Germany from 1906 to the First World War, the weakness of British, French, Soviet, and American behavior toward Germany in the 1930s and World War II, and the American and European responses to the Soviet threat, including the NATO alliance, and the "long peace" of the post-1945 era.     

Public Commitment in Crisis Bargaining

The "audience cost" literature argues that highly-resolved leaders can use public threats to credibly signal their resolve in incomplete-information crisis bargaining, thereby overcoming informational asymmetries that lead to war. If democracies are better able to generate audience costs, then audience costs help explain the democratic peace. We use a game-theoretic model to show how public commitments can be used coercively as a source of bargaining leverage, even in a complete-information setting in which they have no signaling role. When both sides use public commitments for bargaining leverage, war becomes an equilibrium outcome. The results provide a rationale for secret negotiations as well as hypotheses about when leaders will claim that the disputed good is indivisible, recognized as a rationalist explanation for war. Claims of indivisibility may just be bargaining tactics to get the other side to make big concessions, and compromise is still possible in equilibrium.     

Democracy,Veto Player,and Institutionalization of Sovereign Wealth Funds

Sovereign Wealth Funds (SWFs) have become important and controversial in global economy. We analyze why some SWFs have more encompassing and clearly specified governance rules than others. We argue that SWF institutionalization is structurally rooted in a country’s regime type and number of veto players in public policymaking. Democracy promotes SWF institutionalization by its need for strong rule of law, voters trying to constrain opportunistic behaviors of politicians, and the free flow of information. In contrast, the number of veto players has a curvilinear effect. When the number of veto players is very small, institutionalization is too rigid, constraining, and not preferred; when the number of veto players is moderate, it is optimal for veto players to manage their conflict over SWF governance in a more routine and institutionalized fashion; and when the number of veto players grows above a threshold, it becomes too costly to coordinate and produce mutually agreeable institutional rules. Our empirical analysis of 46 SWFs in 30 countries from 2007 to 2009 provides robust confirming evidence. SWF governance is more institutionalized and transparent in democracies and in countries with four veto players. Our research has important theoretical and policy implications for the ongoing debate over SWF.     

Reforming the equilibrium? Veto players and policy change in the European constitution-building process

The EU currently experiences a reform dilemma which is common to many international organizations composed of a large number of veto players who must adopt a change of the status quo. After the accession of ten countries in May 2004, the 25 governmental veto players adopted a modest reform text that proposes as many changes as it retains provisions of the Nice treaty. This ambivalent outcome raised much criticism and has been rejected by the French and Dutch voters who had to ratify the reform. This raises questions on the reasons for change and stability in organizations which attempt to reform their obsolete provisions under the constraint of many (types of) veto players. This study examines under which conditions the positions of the different types of veto players—governments, parliamentary ratification pivots, median voters and the supranational actors—are important to explain the outcome of the draft treaty. Our results suggest that the probability for reform is only determined by governmental gains when we control for parliamentary ratification pivots and median voters from status quo-prone member states. We also find that governments favoring the status quo retain their veto in case either parliaments or voters favor reform. This responsiveness is supported by the fact that median voters also matter when member states did not announce a referendum.     

Legislative powers,veto players,and the emergence of delegative democracy: A comparison of presidentialism in the Philippines and South Korea

This article integrates institutional and rational choice approaches to policy making to explain the emergence of delegative democracy in presidential systems. Delegative democracy, in essence, is a polyarchy which violates the rules and norms that secure the checks on the effective political power of democratically elected presidents at the horizontal level of the relations of the executive, legislature and judiciary. The article argues that delegative democracy is the result of the interaction of two variables: the strength and types of presidents' legislative powers and the configuration of institutional and partisan veto players. Strong, proactive legislative powers and weak veto players permit presidents to establish a delegative democracy; weak, reactive legislative powers and strong veto players hamper the emergence of delegative democracy. This general assumption explains why presidentialism in South Korea and in the Philippines developed in different directions in the 1980s and 1990s. The analysis shows that in case of moderate legislative powers of the president, the number, coherence and ideological distance of partisan veto players becomes particularly important. It suggests that studies of democratic regimes should give special emphasis to the rules regulating the distribution of legislative powers between presidents and parliaments and the configuration of veto players.     

Asymmetric Power Among Agents and the Generation and Maintenance of Cooperation in International Relations

The question addressed in this analysis is whether endowing agents with various forms of asymmetric power makes cooperation more likely across a variety of structural settings of conflict and cooperation present in international relations. To address this question, an agent-based model incorporating asymmetric power among agents in a set of (2×2) games that represent different forms of conflict and cooperation prevalent in international relations (Chicken, Stag, Assurance, Deadlock, and Prisoner's Dilemma) is developed and analyzed via simulation. Simulation results indicate that the introduction of asymmetric power substantially increases the chances that both cooperative agents survive and cooperative worlds evolve. This is particularly the case when agents are endowed with the ability to selectively interact with other agents. Also, anticipated variations in outcomes across the game structures regarding the likelihood of cooperation are supported.     

Veto power and power-sharing: insights from Burundi (2000–2018)

Veto power is a key institutional pillar of consociational power-sharing. However, the literature is divided on its impact for institutional functionality. While the founding father of consociational theory, Arend Lijphart, expects veto rights to be exercised sparingly by segmental elites, more recent scholarship emphasizes the need for restrictions (in terms of veto players, veto issues, veto points and procedure) in order to avoid abusive and disruptive veto practice. Burundi’s transition from ethnic conflict to ethnic pacification was strongly based on the use of military and political power-sharing, including consociationalism. This article examines the design of veto rights and their practice in Burundi over the past two decades. The analysis confirms that the institutional design of veto power matters, but it counters the hypothesis that a too enabling veto design induces the abuse of veto rights and disrupts consociational functionality. The Burundi case-study shows that the impact and “shelf-life” of veto rights are best understood by taking into consideration the intersection of veto power with other power-sharing institutions and practices, both formal and informal.     

Bargaining Between Rebel Groups and the Outside Option of Violence

Although military cooperation among rebel groups in multi-party civil wars could help rebels defeat or extract concessions from an incumbent government, violent conflict among rebel groups is empirically prevalent. Why do rebel groups in multi-party civil wars choose to fight one another? This article models the strategic dilemma facing rebel groups in multi-party civil wars as an alternating-offer bargaining game of incomplete information with an outside option. The game-theoretic model explores the relationship between the status quo distribution of power among rebel groups, the costs of fighting, and the likelihood that one rebel group will opt to unilaterally end bargaining over a set of goods, such as access to supply routes, natural resources, and control over civilian populations. We show that the likelihood of violent conflict between rebel groups is lowest when the status quo distribution of benefits reflects the existing distribution of power.     

Power Transitions,Status Dissatisfaction,and War: The Sino-Japanese War of 1894–1895

Although power transition theory offers a powerful model of international conflict, scholars have not adequately operationalized the theory's key variable of satisfaction/dissatisfaction with the status quo. We argue that status dissatisfaction is an important component of a rising state's overall dissatisfaction with the system. We apply our revised power transition framework to the 1894–1895 Sino-Japanese War. Japan's revisionist foreign policy was driven by economic and security threats posed by China's control over Korea, dissatisfaction with Japan's place in the China-dominated East Asian hierarchy, the hope for recognition as a great power by the West, status-related domestic pressures, and by belief change that was endogenous to shifting power. Despite several earlier crises, Japan made the decision for war only after it had achieved parity with China, which is consistent with power transition theory's hypothesis that under conditions of shifting power, parity is a necessary condition for war.     

Power,resolve and bargaining in international crises: A spatial theory

In this paper the spatial model of crisis bargaining is utilized to derive a number of hypotheses relating the relative power and resolve of crisis participants to crisis outcomes. The resolve and two power variables are defined and the manner in which they are incorporated into the model is demonstrated. The model, which represents a synthesis of traditional utility based bargaining models and the spatial theory of voting, is then used to establish the theoretical linkages among these variables and all possible outcomes of international crises. Among the more interesting results is that crises in which one party is much more likely to win a war should one occur and the other party is much more resolved are extremely likely to end in war. The paper concludes with a discussion of the relevance of these findings to a number of topics in the international relations literature, including Schelling's strategy of commitment.     

The Beauty Premium: Physical Attractiveness and Gender in Dictator Games

Are beautiful people better negotiators? In this article, I present evidence from a simple bargaining game in which players listened to prerecorded speeches and viewed the pictures of other players. I found that physically attractive players received a greater share of the surplus when their partners could both listen to their speeches and view their pictures. This effect was strongest when the listening partner was female. These results suggest new directions for experimental and empirical research on the role of nonresumé characteristics on labor market outcomes, and also has implications for those practitioners involved in negotiations characterized by extreme power imbalances between the parties.     

Inequality Amid Equality: Military Capabilities and Conflict Behavior in Balanced Dyads

Studies of power parity and conflict implicitly assume all balanced dyads are created equal. However, variation exists within the capabilities of the states in these particular dyads. I address the question of what affects the likelihood of conflict onset within relatively balanced dyads. I argue uncertainty—in particular the uncertainty of the expected costs of conflict—determines the likelihood of conflict among these dyads. More uncertainty of costs means a greater likelihood of miscalculation leading to bargaining errors. First, I argue as an opponent’s capabilities increase, uncertainty of costs increase and the likelihood of conflict increases. Second, military action serves a purpose in bargaining and can help reduce uncertainty by signaling a state’s willingness to inflict and endure costs in order to gain a better settlement. Third, information transmission is likely to be effective only when states have the capability to inflict significant costs. As such, while greater capabilities will lead to a high likelihood of conflict onset, they also lead to a reduced likelihood of conflict escalation. The testing of nondirected dyads from 1946 to 2001 supports the theory’s implications.     

Labor–Management Relations: Understanding and Practicing Effective Negotiations

Periodic collective bargaining between employers and unions, combined with contract administration and workplace dispute resolution, has provided many core insights for the broad field of negotiations. Over the past twenty-five years, this arena has advanced knowledge regarding the interdependence of integrative and distributive bargaining, the concurrent shaping of attitudes, the management of internal relations (within a party), and the roles of elected and appointed agents. Public sector negotiations have provided new insights into the dynamics of multilateral bargaining as well as a broad array of mediation and arbitration models. While the number of labor agreements negotiated each year has declined over the past half century, at least 23,000 private sector agreements are still executed each year and fundamental changes in industrial relations systems make continued attention to labor–management negotiations of increasing importance. In particular, this arena now features highly structured approaches applying interest-based bargaining principles and presents profound challenges as power relations shift in multiple ways.     

Political actors,preferences and election rule re-design in Russia and Ukraine

Institutional designers, international organizations and post-Soviet political actors have directed considerable attention to the design and conduct of elections in postcommunist states. This article explores the nature of electoral system re-design by investigating the motives and interactions of legislators, parties and presidents. Following the veto players literature, the analysis focuses on the determinants of policy stability and change. The process of institutional re-design is evaluated in two cases: the successful introduction of the Law on Political Parties in Russia and unsuccessful attempts at major election reform in Ukraine. The article shows that the outcomes of policy reform processes in these 'superpresidential' systems were not solely determined by presidential preferences. Rather, to fully understand election system re-design, it is critical to evaluate the preferences of all relevant veto players.     

The Reputational Impact of Investor-State Disputes

To what extent do alleged violations of international commitments damage state reputation? This article explore this question with specific reference to investor-state disputes arising under the protection of international investment agreements. Its main contributions are threefold. First, building on the political institutions literature, the study places the theoretical importance of information about the rules of the game, and the actions of the participants at the center of analysis. Second, in contrast to prior empirical research, the study systematically analyzes the costs of state involvement in investment treaty arbitration by examining all known disputes. Third, the study addresses the impact of investment disputes on both foreign investment flows and state reputational rankings. We show that the consequences of investment disputes vary with the transparency of the investor-state dispute settlement process. The central implication of these findings for the broader body of literature on international institutions is that reputational mechanisms for effective treaty enforcement cannot be taken as given but instead need to be explored on the basis of a nuanced approach that addresses the pivotal issues of institutional design and information costs.     

Advancing without Attacking: The Strategic Game around the Use of Force

What is the nature of the strategic game that states play during crises? Extensive research examines the leading answer: coercive bargaining. States prevail by signaling resolve, establishing the credibility of their threats, and coercing their adversaries into backing down. However, instead of (or in addition to) traditional coercive bargaining, this article shows that states frequently play out a different game with its own set of rules and tactics. The article explores how states outmaneuver their adversaries: working around their red lines, taking gains by fait accompli and imposing pressure where it is possible to do so without quite crossing the line of unambiguously using force. Based on this premise, the article develops a theoretical framework for understanding strategic interaction during crises, referred to as advancing without attacking, and shows that it best explains the course of the Berlin Blockade Crisis of 1948–49 while also shedding light on other prominent crises.     

Revolutionary Power and Socialization: Explaining the Persistence of Revolutionary Zeal in Iran's Foreign Policy

Why do states stay revolutionary for so long? The question of why and how some political players of a country successfully pursue a revisionist strife against the status quo has neither theoretically nor empirically received systematic attention. I use a current policy issue, the crisis regarding Iran, as a single-case study to examine the issue. This article argues that answers are found in the interconnected realms of domestic politics and revolutionary ideas. In Iranian politics specifically, it is both the ideological conservative faction's occupation of key constitutional positions and pursuit of revolutionary ideas, which have caused the recurring and large degree of revolutionary zeal. In turn, this has had a significant effect on the extent of the Islamic Republic's socialization to regional and international politics.     

Combating Asymmetric Threats: The Interplay of Offense and Defense

The overarching objective of this analysis is to examine the ways and means by which the United States could take the asymmetric battle-space and win against the ever-changing array of threats posed by nation-states and non-state actors. Today's security challenges are predominantly hybrids: offense and defense; symmetric and asymmetric; synchronous and asynchronous; regular and irregular; geographically-focused and globally-ubiquitous. This reality requires multi-dimensional thinking, nuanced approaches, and nimble, decisive execution guided by a new strategic paradigm. Fighting on the enemy's terms, scoring short-term wins at unjustifiably high costs in lives, treasure and lost opportunities is simply unacceptable.     

Strategic Demands, Credible Threats, and Economic Coercion Outcomes

The crisis bargaining literature sees demands as endogenous to crises. However, despite the parallels between military and economic coercion, sanctions researchers have preferred to analyze economic coercion after demands have been issued, and have not explored sufficiently the possibility that when senders formulate their policy objectives, they consider the international constraints imposed by the capabilities and interests of target states. I complement the sanctions literature by deriving the implications of strategic goal formulation in a game theoretic model of economic coercion that assumes endogenous demands. The model explains the inconsistent empirical relationship between sanctions costs and outcomes as well as the paradoxical tendency of senders to select into difficult disputes. I find that threats are not always more effective than sanctions and suggest what an optimal sanctions policy might look like.