1. How International Organizations Work, Or Don’t Work Chapter 7

2. 2 Overview International organizations are designed to facilitate coordination and cooperation across states More inclusive organizations are likely to suffer from collective action problems that lead to suboptimal production of the public goods an institution is meant to provide The problems inherent in designing international revolve around the extent to which their products are excludable or nonexcludable, rival or nonrival Deep agreements are more easily designed when few states are members Information dissemination and organizational flexibility can promote cooperation even when many states are involved International organizations must be evaluated by looking at both their structure (their winning coalition size relative to the size of the selectorate) and the interests of each member state’s winning coalition and selectorate

3. 3 The Purpose of International Rules and Institutions International institutions are meant to solve coordination and cooperation problems and to reduce uncertainty that can lead to disputes –International rules, laws and norms of conduct –and the organizations that implement and enforce them- represent solutions to challenges to peace It is easier to reach international agreements when a problem involves coordination –E.g., air traffic control Cooperation is easier when no one can get extra benefits by free riding or by cheating –The challenge is to design agreements and institutions that enforce them when there are incentives to free ride or cheat

4. 4 The Purpose of International Rules and Institutions An organization’s design must reflect at the outset the members’ best judgment about which problems are likely to arise Five key questions must be addressed 1.How inclusive is the organization’s membership? 2.How are decisions made? 3.How likely is compliance with the organization’s decisions? 4.How is punishment for noncompliance imposed? 5.How effective are the rules and regulations established by the organization? These five issues are interrelated

5. 5 The Purpose of International Rules and Institutions Inclusiveness affects compliance and enforcement Compliance is less likely when an organization demands costly changes in behavior from its members Flexibility –allowing some wiggle room for cheating- may work better than demands for full compliance Flexibility requires effective monitoring and sanctioning rules The greater depth of an organization –its demands for costly behavioral changes and for full compliance- the harder it is to get states to sign on and agree to stiff monitoring and enforcement rules Shallow agreements are more easily achieved

6. 6 Rivalry and Nonexcludability International organizations are usually established to solve big problems that require coordination among multiple governments These issues are vulnerable to the problem of collective action Such problems can be divided into four analytically related groups based on the type of goods they involve

7. 7 Rivalry and Nonexcludability Rival goods are goods that can be used up; when someone consumes the good, it is no longer available to others –E.g., River water sharing between upstream and downstream states; oil fields straddling national boundaries –Rival goods create distribution problems requiring organizational agreements for solutions Nonexcludability means one person’s use cannot prevent others from consuming the same good –Nonexcludable goods may result from the negative externality of some actor’s action –e.g., pollution- or from actions with positive externality –e.g., a government’s efforts to reduce greenhouse gases

8. 8 Rivalry and Nonexcludability Nonexcludable, nonrival goods are public goods –E.g., clear air Goods that are both rival and excludable are private goods –Laws and law enforcement agencies exist to protect property rights Rival but nonexcludable goods include common-pool resources, such as fisheries –The associated collective action problem is known as the tragedy of the commons: individual over-exploitation of the good leads to its depletion Nonrival but excludable goods are known as club goods –E.g., access to intellectual property

9. 9 The Collective Action Problem Suppose there is an agreement on some nonexcludable benefit, the value of which is B N governments equally contribute an amount c of their national revenue to the production of B The global cost will be Nc and the net value B – Nc participate If one government shirks, the expected value of B to everyone is (N – 1)/N ∙ B The shirker still enjoys B with probability (N – 1)/N As N gets larger, B is almost certainly produced, and each government’s marginal contribution is 1/N

10. 10 The Collective Action Problem When C exceeds the marginal increase in the expected value of a the good, then a government leadership has an incentive to free ride: 1/N ∙ B < c Only those for whom 1/N ∙ B > c will contribute A suboptimal amount of B will be produced The problem is exacerbated as N increases Suboptimal production is to be expected when governments must provide a public good or solve common pool resource problems

11. 11 Organizational Solutions to Collective Action Because of free riding, global problems are rarely solved through global solutions One solution is to design agreements only involving those who will accept demanding terms The smallest possible agreement involves two members Bilateral interactions often resemble prisoner’s dilemma When two governments play prisoner’s dilemma over and over again, without knowing the number of interactions, they can find a self-interested path to cooperation

12. 12 Solutions to Collective Action: Repeated Bilateral Interaction If decision makers value the expected benefits from cooperation more than a one-time big payoff, then cooperation will emerge (shadow of the future) Recall that in prisoner’s dilemma T > R > P > S To induce cooperation the reward payoff must be larger than the average of the of the sucker and temptation payoffs: R > (T + S)/2 With repeated plays, joint cooperation is one of the many possible equilibria produced by a strategy called tit-for-tat

13. 13 Solutions to Collective Action: Repeated Bilateral Interaction Short-term cooperation when the other party cheats is costly, but the cost is not so great that a player cannot recover over time When the other player does not cooperate, it can be punished through non-cooperation in successive rounds until she cooperates Over an indefinite number of repetitions, the one time loss becomes trivial vis-a-vis the possible gains from sustained cooperation Tit for tat means a player credibly declares her subgame perfect strategy will be to make the move the other player made in the previous round

14. 14 Solutions to Collective Action: Repeated Bilateral Interaction Risking the sucker’s payoff in the first interaction depends on how much one discounts future payoffs The discount factor δ is how much one discounts future payoffs compared to today’s payoff If prisoner’s dilemma is repeated and two players are cooperating, the reward payoff will be R + δR + δ 2 R + δ3R + … + δ ∞ R This infinitely repeated summation has value R[1/(1 – δ)] If R = $100 and δ=0.96, the final gain will be 100∙(1/1- 0.96) = $2,500

15. 15 Solutions to Collective Action: Repeated Bilateral Interaction Less forgiving strategies do not pay as much as tit-for-tat “Grim trigger”, for example, is a strategy in which one will never cooperate again if the opponent cheats –Under grim trigger, total payoff will be T + P[δ/(1 – δ)] Imagine T = $150, and P=$50 Then $150 + 50∙0.96(1 - 0.96) = $1,350 –Not as good as tit-for-tat

16. 16 Solutions to Collective Action: Repeated Bilateral Interaction Tit-for-tat induces cooperation by making players better off –Mutual self-interest can lead to cooperation Tit-for-tat will not be the equilibrium strategy if the number if repetitions is known This leads to the unraveling problem –Players have an incentive to cheat on the last interaction –Moving in reverse from the last interactions, they will try to preempt each other’s defection until cooperation unravels

17. 17 Solutions to Collective Action: Flexibility Governments may cheat for a variety of reasons Some flexibility in allowing cheating may accommodate situations in which (1) a honest opponent miscalculated, or (2) an actor misinterpreted the other’s action as cheating Escape clauses –“Any provision of an international agreement that allows a country to suspend the [commitments] it previously negotiated without violating or abrogating the terms of the agreement” (Rosendorff and Milner 2001, 830) Flexibility allow governments to deal with short- term domestic political pressures

18. 18 Solutions to Collective Action: Information When bilateral interactions are infrequent, it may be difficult to achieve a long stream of benefits that offsets the short-term gains from cheating Introducing reputational costs is a solution to this International organizations collect and disseminate information that allows governments to establish their reputation and check other governments’ credibility

19. 19 Multilateral Organizations: Inclusiveness and Effectiveness International organizations vary in terms of inclusiveness –Some are very large (the United Nations, the WTO); some are exclusive(NAFTA); some fall in between (OPEC, NATO, the EU, the Organization of American States) Large organizations make it more difficult to establish rules that effectively alter their members’ behavior Larger organizations are more likely to impose shallow requirements than smaller organizations –Organizations tend to achieve higher levels of compliance when their behavioral requirements are shallow There is an ideal size to organizations –If they are too large, monitoring and enforcing deviant behavior become too costly –If they are too small, there are fewer gains from coordinating behavior

20. 20 Multilateral Organizations: Inclusiveness and Effectiveness As an organization becomes larger, the diversity of its members’ policy preferences becomes larger –New members with preferences different from the organization’s founders may block progress Larger membership diminishes the chances of implementing meaningful rules that promote cooperation –A solution is to start small ands require new members to adhere to rules as a condition of joining

21. 21 Alternative Views on Inclusiveness For constructivists inclusiveness is a desirable property of international organizations –Inclusive international organizations shape their members’ interests and identities, promoting cooperation For the selectorate perspective inclusiveness can be a desirable property as cooperation is a public good for all participants This applies only when there is agreement as to which policies constitute the public good When the domestic winning coalition is large, and its preferences deviate from the preferences of the organization’s winning coalition, tensions arise –The strategic perspective favors inclusiveness only if the rules ensure the inclusion of members whose support is needed to keep the individual member’s desired organizational leadership in office

22. 22 The United Nations The UN provides an example of the design problems of inclusive organizations At the General Assembly level, the UN is a large selectorate, large coalition organization –The General Assembly lacks the means to monitor and enforce compliance with its resolutions –The General Assembly resolutions tend to shallow and experience high level of compliance –The design of rules for passing and enforcing UN General Assembly resolutions in endogenous

23. 23 The United Nations The UN Security Council has more demanding rules –It has five permanent members with veto power (Britain, China, France, Russia and the United States) and 10 non- permanent members The more demanding voting rules in the UNSC have two consequences 1.To get the five permanent members (P5) to agree on action, the action must be shallow 2.If the P5 are genuinely behind a UNSC resolution, compliance will be high and the resolution will be effective The UNSC can effectively perform a coordination/facilitation function, but it is unlikely to redefine the policies of the five permanent members