1. QR 38, 2/20/07 Credibility I.Deterrence II.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: 1.Why did Moscow try to put offensive missiles in Cuba? 2.Why did the US respond with a blockade? 3.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: 1.SQ 2.Concessions (C) by defender 3.Challenger backs down (BD) 4.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