QR 38, 2/20/07 Credibility

1. QR 38, 2/20/07Credibility Deterrence Threats, promises, and credibility

2. I. Deterrence • Much of the early development of game theory in political science was driven by the study of deterrence • Deterrence means attempting to prevent aggressive actions by threatening a response • Game theory especially appropriate because it focuses on responses and interaction of rational players.

3. Deterrence game • Cuba: Soviet Union placed offensive missiles in Cuba; United States responded with a blockade. • Consider US threat to use a blockade as a deterrent threat.

4. Deterrence game Three central questions: • Why did Moscow try to put offensive missiles in Cuba? • Why did the US respond with a blockade? • Why did Moscow then withdraw missiles?

5. Deterrence game Deterrence games assume a contest between two players, a challenger and a defender. • The challenger attempts to change the status quo • The defender responds with a threat • The challenger backs down or carries on to war

6. Deterrence game Four outcomes in this deterrence game: • SQ • Concessions (C) by defender • Challenger backs down (BD) • War (W)

7. Deterrence game How do the two players order these outcomes? • Challengers prefer C to SQ, SQ to BD. • But may prefer W to C, or may prefer BD to W (bluffing) • Defenders: BD>SQ>C. W can go anywhere.

8. Deterrence game • Consider equilibria with different values put on W. • In general, deterrence will succeed when the defender puts a relatively high value on W; then the threat of war is credible.

9. II. Threats, Promises, and Credibility • Credibility central to understanding the use of threats and promises • Threats and promises are mirror images of one another; the same credibility issues arise.

10. Credible promises • Promises can be modeled in much the same way as threats • Consider a game where the US promises North Korea increased aid if it dismantles its nuclear program.

11. Credible promises • The same credibility problem arises as in threat games, in that moves are sequential. • North Korea has to move first, decide whether to dismantle • Then US has to come through with the promised increase in aid

12. Credible promises • What are reasonable orderings of the payoffs? • US would prefer to get NK’s cooperation, then to renege on the promise of aid • Knowing this, NK may refuse to dismantle unless US can lock itself in to providing the aid

13. Credible promises • Credibility problem is exacerbated by the fact that Congress probably has to sign off on the provision of aid • How can US increase its credibility; i.e., decrease the payoff for reneging? • Consider reputation; not really a one-shot game • Lock itself in, e.g. eliminate don’t pay option

14. Other questions • What factors should increase the likelihood of successful deterrence? Think about how they might change the payoffs for each outcome. • What is missing in this simple discussion of deterrence?

15. What’s missing • More players • Repeated play • More options • Uncertainty • About type, resolute or irresolute • If this exists, reputation and signaling become important