Estimating State Preference in International Crises: An Application

1. Estimating State Preference in International Crises: An Application

2. Motivation • Question: What are the sources of state preferences in international crises? • Challenge: • Preferences are unobserved, so we need to infer them from observed choices • In a strategic setting, the mapping between preferences and choices is complicated by (a) interdependence and (b) uncertainty

3. The Crisis Bargaining Game A • Information Structure: • B does not know SFA and BDA • A does not know SFB • All other payoffs common knowledge Not Challenge Challenge B Not Resist SQ SQA, SQB Resist A Not Fight ACQ ACQA, ACQB Fight BD BDA, BDB SF SFA, SFB

4. From Theoretical to Empirical Model A • Information Structure: • eSFA, eBDA, eSFB~N(0,1) • A observes eSFA, eBDA • B observes eSFB • X common knowledge Not Challenge Challenge B Not Resist Resist A Not Fight Fight

5. The Equilibrium Probabilities Outcome Probabilities:

6. Normalizations/Constraints • Normalize SQA and BDB to have zero mean by demeaning the covariates and including no constants in these expressions. • Constrain the constant in ACQA to be greater than zero, and the constant in ACQB to be less than zero. This ensures that, on average, • ACQA > SQA and ACQB < BDB • i.e., the “good” is actually a good.

7. Why Do This? • Captures the strategic nature of choices and the role of asymmetric information in a crisis interactions. • Strategic interaction can lead to non-monotonic relationships and other oddities that are not easy to capture in linear models. • Allows us to estimate the effects of covariates on specific payoffs, rather than on outcomes.

8. A Possible Non-Monotonic Effect

9. The Pitfalls of Standard Practice • Schultz, “Do Democratic Institutions Constrain or Inform?” (1999 International Organization): • Theoretical Prediction: • If democracy decreases WA, then democracy in A should increase the probability that B resists. • If democracy decreases BDA, then democracy in A should decrease the probability that B resists. • Empirical Result: Democratic initiators face lower probability of reciprocation in militarized disputes. • Conclusion: Democracy decreases BDA.

10. But… A correlation between democracy in A and an increased probability of ACQ by B can be the product of more than one thing: Equilibrium Probability of the ACQ Outcome WA WB BDA

11. Caveat Emptor • Do we believe that this stylized, theoretical model actually generated the data? • Data demands • Data need to reflect game outcomes • The SQ problem • Large number of observations are needed to avoid empirical under-identification

12. The Data • Cases drawn from • International Crisis Behavior (ICB) • Militarized Interstate Dispute (MID) • Definition of Challenge: • “Any act that is made deliberately by a central state authority with the intent of altering the pre-crisis relationship between itself and at least one other state and that is backed by the threat of military force. The threat of force may take the form of a diplomatic ultimatum, a show of force, or a limited use of force.” • For each case, we identify • State A (Challenger) • State B (Target) • Outcome (SQ, ACQ, BD, SF)

13. The Data • In the period 1919-1939, we identified 93 dyadic challenges. • Outcome distribution:

14. The Status Quo Problem • What is the correct population of SQ cases? • We can only be sure that a play of the game took place if the outcome is not SQ. • How often do crisis opportunities arise? • We generated 4188 SQ observations meeting the following criteria: • No challenge occurred in a three-year period • The dyad consisted of • Contiguous states, or • major powers with other major powers and states in their geographic region. • For each dyad that met this criterion, there are two observations, since each state has a turn to be the challenger. These observations were given weight ½.

15. Empirical Under-Identification Even if a parameter is theoretically identified, it may be hard in practice to distinguish the effects of two parameters that have similar effect on behavior in the game.