Provisions for Noncompliance and Treaty Value: A Game Theoretic Perspective

We present a game theoretic analysis of the prevention of noncompliance that deals with treaty violations whether they are intentional or not. Game theorists have developed probabilistic trigger schemes to handle such situations. We analyze dispute resolution procedures in subgame perfect trigger terms and suggest alternative designs for the handling of signatory breach. This paper shows that designs can be compared directly by evaluating their ability to keep signatories close to the cooperative goal in the long run. This criterion enables us to highlight the merits of generosity and redress for dispute resolution. Generosity avoids retaliation with certainty so that parties can settle before any retaliatory action is implemented. But if retaliation does come to pass, it is the cost to the victim of punishing the perpetrator that determines a design's value. Using a simple repeated prisoner's dilemma framework we find that, in most circumstances, a subgame perfect design that adds concern for the injured party's redress to the generosity built into a probabilistic trigger scheme yields better treaty value.