Reputation and Hegemonic Stability: A Game-Theoretic Analysis

Author(s): James E. Alt, Randall L. Calvert and Brian D. Humes

Source: The American Political Science Review, Vol. 82, No. 2 (Jun., 1988), pp. 445-466
Published by: American Political Science Association
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 REPUTATIONAND
HEGEMONIC STABILITY:
A GAME-THEORETIC
ANALYSIS
JAMES E. ALT
HarvardUniversity
RANDALL L. CALVERT
ofRochester
University
BRIAN D. HUMES
MichiganStateUniversity

We developand explicatea game-theoretic modelin which

repeatedplay,incompleteinformation, andreputation
aremajorelements. A significant
advanceofthismodelis thewayitrepresents underincomplete
cooperation information
amongrationalactorsofdifferentsizes.Themodelis usedtoformalizecertain aspectsof
the"theory of hegemonic It showsthatthe"dilemma"or "limits"
stability." of hege-
monicstabilitylooklikenaturalattributesofgameswherereputationis involved,unify-
ingboth"benevolent" and "coercive"strandsofhegemony An example,drawn
theory.
fromrecent developmentsintheOrganization ofPetroleum-exporting
Countries, shows
how our modelof reputation guidesthestudyof hegemonic regimeconstruction. We
concludeby comparing thenatureof cooperative behaviorunderconditions of com-
pleteand incompleteinformation.

We hereaddress incompleteinformation.Within our

two closelyrelatedpurposes.One is the
development andexplicationofthestrate-
gic nature of "hegemonic"relations
among rationalnation-actors, using a
game-theoretic modelin whichrepeated
play,incomplete information, and repu-
tationare major elements.1 The model
itself has broader applicability. In
general,itdescribesa "large"actor'sabil-
ityto affectdistributional
outcomesin a
situationwhere actors compete over
sharesat thesame timethattheycoop-
erateto producea good.
Our otherpurposeis to illustrate
game
theory as "appliedtheory,"
usedtomodel
featuresof situationsand deriveobserv-
able implications.We considerthe col-
lapseofoilpricesinlate1985as a gameof
model,centralfeatures ofthatepisodein-
clude thedifferent productioncapacities
of Saudi Arabiaand otheroil producers,
uncertainty about futureworlddemand
foroil, and certaininternalcostsknown
onlyto theSaudis. Our analysisshows
thatin hegemonic situations
therecan be
instability,because reputationalcon-
siderationspredictthat in equilibrium
actorswill follow"mixedstrategies" of
challengeand acquiescence,and that
cooperationand information spreading
willbe severelylimited.
The significantadvanceofourmodelis
its abilityto represent cooperativebe-
haviorwhenrationalactorshave asym-
metric information anddifferentcapabili-
ties. Information is asymmetricallydis-

AMERICAN POLITICAL SCIENCE REVIEW

VOL. 82 NO. 2 JUNE 1988

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 AmericanPolitical Science Review Vol. 82

tributedin thatan actormay knowits amongactorsof information and other

own truecostsand payoffsbetterthan powerresources-lielargely outsideexist-
othersdo. Capabilitiesdiffer to suchan ing game-theoretic analyses of inter-
extentthat,evenifat costto itself,only national regimes.The second section
one "large"actoris able to punish(inflict describesgamesof incomplete informa-
costson) others.Withinthisstructure we tionand showshowreputation addresses
show thatthereexistsan equilibrium of problems ofhegemony. Itthendevelopsa
cooperation undera largeactor'sreputa- modelofreputation, demonstrates thatit
tionfortoughness. Thisdemonstration is producesa Bayesianequilibrium under
important sinceanalystscanviewobserv- mixedstrategies, and describespossible
able behaviorcorresponding to an equi- extensions ofthemodel.The thirdsection
libriumas something reasonablepeople usestheexampleoftherecentcollapseof
coulddo and persistin doing. oil pricesand subsequent behaviorofthe
Thus we bringtogether a numberof nationsintheOrganization ofPetroleum-
previously separate perspectives. Our exporting Countries (OPEC) to elaborate
model accords a major role in inter- on the model. The conclusionprovides
national relations to reputationand further examples, stressesdesirableexten-
threat,as any studentof diplomacy sions, and characterizes differences in
would want. It stressescoercion,but effective strategicchoiceand cooperation
treats regimesas chosen cooperative betweenhegemonicand nonhegemonic
behavior.Mostimportant, itshowswhat situations.
is gainedbytakinga morecomplexmodel
fromtherealmofeconomics andapplying
it to a developing area oftheoryin polit- Hegemonic Stability,
ical science, the (hithertoinformal) Uncertainty, and Reputation
"theoryof hegemonic stability."In fact,
manyof theinsights ofhegemony theory RegimeAnalysis, GameTheory,
turnouttobe features ofa repeated game and Hegemony
ofincomplete information. In formalizing
this theory,our model shows thatthe The interest ingametheory amongstu-
"dilemma" (Stein1984)or "limits" (Snidal dentsof international relationsis closely
1985a) of hegemonic stabilitycan be re- connectedwiththe analysisof regimes.
interpreted as naturalattributes ofgames Regimesareagreed-upon, semivoluntary,
involving reputation. Snidal'sdistinction ongoing, long-run joint maximizing
between "benevolent"and "coercive" strategies thatinduceseemingly selfless
strandsof hegemony theory is thus sub- behavior. Broader than formal agree-
sumedwithina unified model.Thisoffers ments,regimes includeprinciples (stating
hopeofadvancingthepromisethatRug- purposes),norms(generalinjunctions or
gie (1985) ascribesto game theorythat definitions of legitimacy),rules(specific
"both conflictand cooperationcan be rightsand obligations),and procedures
explainedby a singlelogicalapparatus." (formalindications of meansratherthan
Thisaccommodation ofthecentral con- substance).Regimesprescribe actionsfor
cerns of hegemonytheorists(unequal members and persistwhenmembers fol-
resources)and game theorists (strategic low theseprescriptions. Examplesinclude
interaction) proceedsas follows.Thefirst cartels,tradeagreements, financialsys-
section introduces the theory of tems,and thelike.
hegemonic stabilityand showshow cer- Gametheorists havesoughttointerpret
tainfeatures ofthehegemonic situation regimesas cooperativesolutionsto re-
particularlyasymmetricdistributions peatedcollectiveactiongames.Rational

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 HegemonicStability

actors(thatis,actorswhomaximize long- Significant Featuresof

run net benefitsand choose coursesof HegemonyTheory
actionbasedon theirownpreferences and
expectations of how otherswill behave) Asymmetry ofSize.Thecentral feature of
under appropriatecircumstances have hegemony theoryis thatthehegemonis
sufficient incentivesto cooperatewith "big"relativeto others.Substantively, it
each other.Amongsuch actors,struc- maybe bigin markets, bigin capital,big
tured, regimelikeinteractionswould in resources,or big in militarypower
appearand persist.Whether cooperation (Keohane1984). Theoretically, it has a
ensues in such games dependson the sizeadvantage.Unfortunately, thegame-
structure of payoffs,the probability of theoreticanalysisof regimeshas been
repeatedinteraction, and thenumberof restricted to equal-actor,completeinfor-
players(Oye 1985). mationgames,whichimposesymmetry
Hegemonicstabilitytheoryholdsthat on issues,forinstance, "bytreating a very
spontaneouscooperationin these re- largestateand verysmallones as equal
peated games seldom occurs and that partners in a Prisoners'Dilemma"(Snidal
stableregimesdependinsteadupon the 1985b,47). Our game-theoretic analysis
fosteringactionsofa dominant state.The beginsby assumingthe hegemon'ssize
hegemonic stateprovidesan international advantage,whichwe treatas superiority
orderthatfurthers its own self-interest,in thepossessionof information and in
althoughthe resulting cooperationmay theabilityto inflict costson others.2
workto theadvantageof otherstatesas
well (Snidal1985a, 587). This theoryis Distributional Conflict.Hegemonytheo-
appliedtosuchdiversecasesas Dutch-led ristsrepeatedlyobservethat while all
worldtradein theseventeenth and eigh- hegemonicregimescontaina big actor
teenth centuriesand British trading andmanysmallactors,sometimes thebig
regimes in thenineteenth century by Gil- actorappearsto geta good deal (Snidal's
pin(1981),Keohane(1981,1984),Kindle- "coercive"strand,Kindleberger's "domi-
berger(1973,1981),Krasner(1976),and nance"),at othertimesthesmallonesdo
Stein(1984).A smallpartof theconflict ("benevolent" strandand "leadership").
betweenthe hegemonicstabilitytheory Thisis becausehegemonic stabilitytheo-
and game theoryof regimesreflectsa ries,like otherpoliticaleconomyefforts
debateover theeffects of largenumbers to modeltheroleofenforcement inassist-
on the robustnessof cooperation(Oye ing voluntarycooperationthroughcon-
1985,15). More importantly, hegemony tracting, seek to explainthe sharingof
theorytypically stresses a varietyoffea- anygenerated surplusorgainsfromcoop-
tures-size asymmetries, distributional erating. Such possible "rent-sharing"
conflict,costly coercion,learningand arrangements betweena "big"enforcer (a
uncertainty, and instability-that have "hegemon")and manysmallothers(the
proved difficultto model in game- "allies")forma continuum. One end we
theoreticanalysesof regimes.Although could call an empire,wherethe allies'
someformalization of strategic elements shareis some levelof netbenefitbelow
ofhegemony is desirable, thegametheory whichtheywouldresistor rebel,and the
of international relationscouldprofitby hegemongetstheremainder. The otheris
incorporating important insights ofhege- an alliance,inwhichthealliesgetmostof
monytheorists. Our incomplete informa- thebenefits (say, theprovisionof order)
tionanalysisof hegemony is formulated whilethehegemon mayhardlyfarebetter
to reflecttheseinsights, whichwe now thanwithno regimeat all.
elaborate. In betweenare the most interesting

447

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 AmericanPolitical Science Review Vol. 82

situations,in whichthegainsfromcoop- One wayis fora weakerhegemon topre-

erationare shared.Here, the hegemon tendto be stronger by "investingin repu-
would alwayspreferto extracta larger tation":bearingsomeinitialcosttoestab-
contribution (net of any cost of extrac- lish a reputationfor"toughness" which
tion)fromtheallies,who(foranylevelof subsequently (ifbelieved)allowscheaper
privatebenefit securedby theavailability coercion.Indeed,thisreputation seeking
of order)in turnwouldalwaysprefer to appearsto be a commonfeature ofhege-
contribute less fortheorderitself.How mony,whether in militarymatters, tariff
good a deal eachgetsdetermines whether wars(Stein1984,371),orfinance(Lipson
theoutcomemorecloselyresembles em- 1985).Naturally, misrepresenta-
strategic
pireor alliance.The keyis thehegemon's tioncan backfire whenbluffsare called
abilitytoforcesubordinate statestomake and futurecredibility requirescarrying
contributions, whichis based on its size out costlythreats(Downs, Rocke,and
advantage.Indeed,as Snidal(1985a,588- Siverson1985, 133; Ward 1987). Our
90) pointsout, if the allies receivenet model formulates more preciselysome
benefits,"theymayrecognize hegemonic reputation-seekingstrategiesand thecon-
leadershipas legitimateand so reinforce ditionsunderwhichtheyare rational.
itsperformance and position."
HegemonicDecline. Finally,a regular
CoercionandCosts.Thehegemon's being feature ofhegemonic regimes is theirpro-
recognizedas legitimate is one way to pensityto decline,a degreeof instability
reducethecostofextracting contributions remarkable in something theorized about
fromtheallies.Thishighlights theimpor- foritsstability. Buttheredoesn'tseemto
tantrole of the cost of coercionin the be muchdoubtaboutwhytheydecline.
theoryof hegemony.3 The cost of coer- Oye (1985,5) citesa studyby McKeown
ciondependsonwhatis donetocoerce.In thatshowshowunanticipated downturns
trade,if the hegemonentersan ally's in thebusinesscyclealterthebenefits of
marketscompetitively, it may have to opentradepolicies,and Stein(1984,349)
bear the cost of subsidizingits own attributes instabilityto differentialrates
exports.In defense,withdrawal of mili- ofeconomicgrowth andrapidlychanging
taryprotectionforcesthe hegemonto markets. Buta hegemonic regime founded
bear the costs of findingalternatesites on reputation containsitsown sourceof
and arrangements forrefueling, sincereputation
training, instability, requiressome
and stagingof exercises.Effective sub- uncertainty about futurecosts of coer-
maynotbe available.Our model cion. Repeatedinteractionmay allow
stitutes
bringsout clearlytheway in whichthe alliesto learnmoreaboutthehegemon's
costof punishing is thekeyto thehege- nature,erodingthereputational basis of
mon'sstrength. We distinguish between an existingregime.Of course,costs in
"strong"hegemons,who coerceat low turnmayalso changewithunanticipated
cost,and "weak"hegemons, who coerce changesin a widerworld(of trade,or
at high cost but mightin appropriate whatever) beyondthecontrolofthehege-
situationsnevertheless fromcoer- monorregime,
benefit producing theappearance
cion. Bothsortsare distinct fromallies, of instability.
who are assumedincapableof coercing
profitably. Summary.We identifya regimewith
equilibriumbehavior in which actors
Reputationand Uncertainty. But how maintaincooperation.Cooperationneed
doesa hegemon gettobe "legitimate" and not entailhegemony, and thusKeohane
thuscollectcontributions withoutactual- (1984) can be rightin claimingthat
ly carrying out costlycoerciveactions? hegemonic stabilitydoes notexplainthe
448

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 HegemonicStability
Bretton Woods regime.Snidal(1985a)is
also rightto say thatdeclining
hegemony
maybe replacedby eithercooperation or
conflict.A formalmodel of hegemony
shouldaddressthisaspectoftheproblem
and also have roomforcostlycoercion,
learning,uncertainty, and decline.We
believethatstrategic reputationbuilding
is thekeyto modelsofhegemonic stabil-
ity.We shallseebelow(1) howthetheory
of gamesof incomplete informationcan
addressall thesepoints;(2) how asym-
metricinformation coupledwithcostly
coercionprovidespossibleincentives to
investin a reputation fortoughness;and
(3) how reputation in turncan-produce
regimesthatlook moreor less like em-
piresor alliancesbutthatcontainwithin
themtheseedsoftheirownunraveling.
The Game Theoryof
Reputationand Leadership
Gamesof Incomplete
Information
Our modelis a repeated gameofasym-
metric incompleteinformation.Most
game-theoretic applicationsin interna-
tionalrelations(and in politicalscience
generally) haveemployed gamesofcom-
pleteinformation; thatis, thestrategies
availableto all playersand theresulting
payoffs forall playersare assumedto be
commonknowledge.Phenomenaincom-
patiblewiththeseassumptions, such as
commitment, bluffing, and reputation,
are usuallydescribedas "situational fea-
tures"not analyzablewithinthe game-
theoreticmodel.4Forsubjectslikeregime
stability,in whichincomplete informa-
tionand reputation maybe central,such
analysesbecomeinformal justat thepoint
wheregame-theoretic rigorshould,ideal-
ly, play its most importantrole: the
analysisofcomplexstrategic interaction.
Game theorists, beginning withHar-
sanyi (1967-68),have devisedtools to
bringthesephenomena underthesameset
449
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of modelingassumptions used in more
traditionalgame-theoretic approaches.In
gamesof incomplete and asymmetric in-
formation, theplayersdo not knowthe
entire structureof payoffs. Indeed,
playershavedifferent information. Each,
forexample,mayknowonlyitsownpay-
offs. With repeatedinteraction, these
information conditionsareprecisely what
createthe possibilityof reputation, as
well as learningand adjustment (Snidal
1985b;Wagner1983).
Consider,for example,the "empire"
pole of the continuumof hegemonic
arrangements. Here,a coercivehegemon
exploitsalliedstatesby forcing behavior
costlytothemandallowingthemminimal
benefitsin return.Coercion,involving
militaryforceoreconomic sanctions, may
be costlyto the hegemonas well. The
coststo thehegemonwillvaryfromone
situationto another,andmaynotbe pre-
ciselyknown to the vassal states.As
a result,the hegemoncan sometimes
threatenpunishments whosetruecosts,if
carriedout,wouldoutweigh theexpected
benefits fromthecoercedbehavior.Ifthe
allies'uncertainty meansthatthethreats
do notalwayshaveto be carriedout,the
resultsmay profitthe hegemon,which
buildsa reputation forbeingmoreableto
punishthanit actuallyis.
At theoppositepole,thatof"alliance"
hegemony, reputation is equallyimpor-
tant. Suppose firstthatseveralnations
wouldbe nearlyequal beneficiaries from
providing a collectivegood but thatone
of them(thehegemon)is able to provide
selectiveincentives,perhapsthrough mili-
taryoreconomicactionsunrelated to this
collectivegood.Theseincentives arecost-
lytothehegemon; and,again,thecoststo
thehegemonvaryand are not perfectly
knownto thehegemon's allies.The allies
knowtheirnetbenefits fromboththecol-
lectiveandselective goodsandknowthat
thehegemonhas an incentive to mislead
themby misrepresenting its costs.They
are tempted to challengetheregime, that
 AmericanPolitical Science Review Vol. 82

Figure1. The HegemonyGame A Gameof Reputation

underIncomplete
Information
Payoffs
Ally
In this sectionwe examinea purely
Ally obeys
0 a game-theoretic approachto theproblem
ofreputation building.The modelallows
Hegmon us to derive the choices, deceptions,
acquiesces guesses,andlearning processes
Ally
b 0 ofrational
challenges playersina settingofincompleteinforma-
tion. It yieldsa sequentialequilibrium,
b-i _xt whichwe exploitto analyzethenatureof
reputationand of rational reputation
Assumptions: 0< b' I
ao I
building.5
x a (I withprobabilityw Assumptions. Our modelassumesthatin
l0 withprobability1-w
each of two periods,a hegemonfacesa
potentialchallenge froma singleally.6In
periodt, allyt can eitherobey(adhereto
thebehaviorrequired intheregimeoralli-
ance) or challenge(go againstthehege-
is, to dump some steel, reduce an ex- mon's wishes).If ally t challenges,the
changerate,reducedefenseexpenditures. hegemoncan eitherpunishthatally or
But the hegemon can gain benefitsfor acquiesce.Ally 2 learnstheoutcomeof
itself (and the allies) by occasionally period1 (obey;challengeand acquiesce;
applying selective incentives, even if or challengeand punish)beforemaking
costly, maskingits true patternof costs itsownchoicesin period2. Figure1 dis-
and counteractingtheir temptationsto playsa singleperiodofthisgameinexten-
challenge. siveform.
In either of these settings,or any in As thefigure shows,an allywhoobeys
between,we have a hegemonthreatening receiveszero. An ally who challenges
otherstateswithpunishmentfornot con- receivesb (O < b < 1). Punishmentexacts
tributing.Uncertaintyabout the cost of a penaltyof one, so an ally who chal-
those punishmentspresentsthe hegemon lengesand is punishedreceivesb - 1.
witha chance to maximizeits benefitsby Thuseach allyprefers mostto challenge
threatening,promising,sometimespun- and not be punished;challenging and
ishingor rewarding,creatinga reputation being punishedis the worst outcome.
for willingnessto punish. The most suc- (The value of b could be assumeddif-
cessful,stable regimesof thissortwill be ferent foreachallywithout changingany
the ones in which the hegemonoptimizes of ourresults.)
its use of thesecostlythreatsto createthe In each periodthehegemonreceivesa
desired reputation.Of course, if a hege- payoff ofa (a > 1) iftheallyobeys,and
mon could almost always punishwithout zeroiftheallychallenges. Ifthehegemon
cost, regimemaintenancewould be easy choosesto punisha challenge, thecostof
and stable hegemony common. The punishmentin period t is Xt, where xt is
assumption underlyingour approach is one (costly)withprobability
w and zero
that hegemonsmust typicallydepend on (cheap) withprobability1 - W.7 The
costlypunishment.Thus by focusingon hegemonlearnsthevalueofxtat thebe-
reputationbuilding,we analyze decision ginningof periodt, beforeeitherplayer
makingat themarginthatis mostrelevant makesa moveinthatperiod,butfacesthe
to regimestability. probleminperiod1 ofchoosinga rational
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 HegemonicStability

strategyforthatperiodwithoutknowing includes thefollowingelements: (1) a move

whetherpunishment will be costlyin (obeyor challenge)to be madeby ally1
period2. This is a key featureof our that,giventhe hegemon'sstrategy and
approach:unlikeothermodelsin which ally 1's beliefsabout W, maximizes ally
the hegemonis alwaysstrongor weak, I's expected payoff;(2) a ruleforally2 for
here thereis some uncertainty for the responding to the outcomeof the first
hegemonas well. period,whichmaximizes ally2's expected
The valueofw mightbe thought ofas payoffgiventhehegemon's strategy and
the"expected weakness"ofthehegemon. givenally 2's updatedbeliefsabout W,
The higherthevalue of w, the"weaker" usingBayes'ruleto takeintoaccountthe
the hegemon,that is, the more likely outcomeof period1; and (3) a strategy
punishment is to be costly.We assume thatmaximizesexpectedpayoffforthe
thatthehegemon knowsthetruevalueof hegemon,giventheallies'strategies, de-
w-how weakhe or sheis on average- scribing howthehegemon wouldrespond
butnotwhether an individual punishment inperiod1 ifally1 challenged andhowto
episodewill be costlyuntilthatperiod respondifally2 challenges, giventheout-
arrives.Allieshave an initial,subjective comeofperiod1, foreachpossiblevalue
estimateof w summarized by a random of thehegemon's privateinformation (w,
variableW; buttheyneverlearnthehege- x1,andx2).In thisandthenextsectionwe
mon'struecosts.As thegameproceeds, describesuchan equilibrium and discuss
alliescan tryto makeinferences aboutw certainofitsproperties. Formalproofsof
fromobservingthe hegemon'sinterac- theseresults areoutlined intheAppendix.
tions with otherallies; but theyonly In this equilibrium,the hegemon
observe acquiescenceand punishment, alwayspunishesinperiodt (t = 1 or2) if
notwhether punishment was costly. xt = 0 andneverpunishes inperiod2 ifx2
So thattheallies'Bayesianupdatingof = 1. Thelatter is required becausethereis
theirbeliefsaboutw be relatively simple, nothingto be gainedby punishing in the
we assumealso thatW has thebetadis- finalperiod.(Whether thereis eversucha
tribution.Intuitively, theirbeliefsdepend "finalperiod"in therealworldis an issue
on two parameters ae and 13,whereae to which we return subsequently.)
countscostlypunishments and 1 counts Beyond this, each player's behavior
cheap ones; oi/(ai+ ,3) is theally'sex- dependsupon thevalue of b, theallies'
pectedprobability thatthehegemonwill payoff,relativeto the allies' beliefsas
facea costlypunishment.8 In equilibrium, describedby axand ,3.In effect, thisis a
by observingthehegemon'sbehaviorin comparisonbetweenthe temptation to
case ofa challenge inperiod1, ally2 can challengeand the danger(i.e., theesti-
updateW, thatis, modifya and ,3using matedprobability together withtheally's
Bayes'rule,assumingthatthehegemon confidencein that estimate)that the
followsitsequilibrium strategy. hegemon can punishcostlessly.
To illustrate
thereasoning behindthis
Equilibrium. The solutionto sucha game equilibrium, supposefora momentthat
of incompleteinformation is called a therewereonlyone periodof play and
Bayesian(Nash) equilibrium(Harsanyi thattheallybelievedthehegemon would
1967-1968),whichis an internally con- punishifthiswerecheapandnotifcostly.
sistentcombination ofactionsand beliefs Thentheallywoulddecidewhattodo by
such thatneitherplayerwould wish to makingan expectedvalue calculation.It
changeitsactionsunilaterally, giventhe could challengeand getaway withit (if
assumedincompleteness of information. punishment werecostly),receiving b with
A Bayesianequilibrium forourgamethen probability + p3);itcouldchallenge
oa/(oa

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 AmericanPolitical Science Review Vol. 82

Figure2. Temptation,Danger, and the Four Cases of EquilibriumStrategy

Case 1 Case 2 , Case 3 Case 4

I ~ ~ I ~~ 3~Value lo- ofb
I (Temptation)
's _ ra +3 __+1_

a+13+I a+/3 a+/3 a+/3+1

and be punished,receiving (b - 1) with r= {1[-Vbao + 3 + 1)- A1]}

probability f3/(a+ 3); or it couldobey,
receivingzero. Summing,the expected
payofffromchallenging is thenb -/(a
+ A); so theally in such a case would
challengewheneverb > f3(ca+ p3).
Repeatplay opensup the possibility of
reputation and deterrence and so compli-
catesthecalculation.In fact,theequilib-
riumcomprises fourseparatecases,illus-
tratedin Figure2.
Case 1. b < 3(c + a + 1). The allies'
benefit fromchallenging is so smallrela-
tiveto theprobability of costlesspunish-
mentthattheyneverchallenge.Even if
ally 1 did (irrationally) challenge,the
hegemonwould not need to punishin
orderto detera rationalchallengefrom
ally2. Formally, in equilibrium thehege-
mon neverpunisheswhenxt = 1 and
neither allychallenges.
Case 2. f/(oa+ 3 + 1) < b S f3/(ao +
O). Here the temptationis somewhat
greater,but stillally 1 is afraidto chal-
lenge.Withno revisionin initialbeliefs,
therefore, ally2 also obeys.However,if
ally1 had irrationally challenged and the
hegemon had acquiesced,ally2 wouldbe
willingto challenge.9To deterthis,a
hegemonalways punishesa challenge
fromally1, evenifcostly.
Case3: f/(oa+ ) < b < (q + 1)/(x +
a + 1). This is substantively the most
interesting case, because herethe hege-
monmustactivelyestablish a reputation.
If x1 = 1, thehegemonpunishesa chal-
lenge fromally 1 with probabilityr,
where
a[b(ac + 3 + 1) - (]
that is, the hegemonpursuesa mixed
strategy.The allies' behaviordepends
uponwhichofthefollowing twosubcases
applies:
Case 3'. b < (roe+ f3)I(oz+ O). Ally1
obeys.Here,ally1 is deterred, notby the
highprobability ofa costlesspunishment
butbyappreciation ofthehegemon's will-
ingnessto engagein reputation building.
However,ally 2, who will onlybe pun-
ishedif it is costless,alwayschallenges.
The hegemonhas not had a chanceto
builda reputation.
Case 3". b > (rae+ 0)/(ca+ f3).Here,
ally 1 challenges.If thehegemonacqui-
esces,thenally2 also challenges. Ifally1
is punished,thenally2 pursuesa mixed
strategy, obeyingwithprobability 1/a.In
otherwords,thepunishment sometimes
detersally 2; the lower the hegemon's
incentiveto deter,the more oftenthis
deterrence is successful.
Ally2 has a sus-
piciousnature.
Case 4. b > (f3 + 1)/(oa + (3 + 1).
Symmetrically withcase 1, herethetemp-
tationis so highthatthe allies always
challenge.Evenif thehegemonpunishes
ally 1, ally 2 cannotbe deterred, so the
hegemonnever applies costly punish-
ments.
The strategiesspecifiedconstitutea
Bayesianequilibriumto the hegemony
game.It is also a sequentialequilibrium
(Krepsand Wilson1982a). Amongother
things,a sequentialequilibrium is "sub-

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 HegemonicStability

gameperfect," meaningthatit is rational deterrent effect,thehegemon wouldhave

to carryoutanythreats shouldtheocca- no incentiveto carryit out. Similar
sionariseeveniftheoccasionshouldnot reasoning showsthatthehegemon cannot
arise underequilibriumbehavior.This avoid all costlypunishment and thatally
appliesespecially to theimplicit threatby 2 cannotrespondto first-period punish-
the hegemonin case 2 above to punish mentbyalwaysobeying.In general,such
anychallenge by ally1, although inequi- purestrategies, ifexpected by opponents,
librium ally1 neverchallenges. A sequen- would bringabout strategic adjustments
tial equilibrium is also "trembling-handthatwouldleavethepure-strategy player
perfect," meaningthatitis robustagainst dissatisfied withitsownstrategy. Onlyif
at least some possibility of mistakesby all playersmutually intendto carryout-
theplayersin makingtheirmoves(Selten and expectone anotherto carryout-the
1975). specifiedmixed strategies,will each
playerbe satisfied withbothitsstrategy
MixedStrategies andEquilibrium Reputa- and its expectations about the others'
tion-Building. This equilibrium features strategies.Reputationbuildingthrough
realisticreputation buildingby thehege- mixedstrategies is theonlystable,consis-
monin case 3". In cases1 and2, no chal- tent,rationalcombinationof strategies
lengeshouldevertakeplace;andincase4 and expectations forall players.10
challenges are neverdeterred, so thereis Theoretically, a mixedstrategy is onein
In
neverany punishment. case 3, how- which a player chooses among the avail-
ever, the hegemontakes advantageof able "pure"strategies at random,accord-
opportunities to build a reputationby ing to some predetermined probability
sometimesinvokingcostlypunishments distribution. Theresultofthisrandomiza-
to tryto deterally2 fromchallenging. In tionis notobservedbytheopponent until
turn,ally2 is indeedsometimes deterred. aftertheopponent's (here,ally1's) choice
Most importantly, all this behavioris is made (Luce and Raiffa1957, 69-71).
rationalfortheplayerseventhoughthe Behaviorally, a hegemon canachievesuch
allies are sophisticated about the hege- a mixedstrategyby basing the choice
mon'sincentive to deceive,thehegemon upon some exogenousvariable whose
is awareofthatsophistication, andso on. valueis knowntothehegemon at thetime
Thiscontrasts withreputation buildingin ofchoice(butnotbefore)butonlyknown
modelssuchas thatof Bramsand Hessel probabilistically to the allies. For in-
(1984). stance,inan international gamewe might
A significant featureof thereputation- thinkof thehegemon's truecostof pun-
building behaviorpredicted bythismodel ishment as beingxtplus a randomvalue
is thatit necessarily involvestheuse of v, representing specialdomesticpolitical
mixedstrategies by thehegemonand by considerations learnedby thehegemon at
ally2. To see thatthisis necessary, sup- thetimeof choice,perhapsin a separate
pose insteadthatthehegemon's strategy game involvingthe hegemonbut un-
incase3 werealwaystopunishinequilib- observableby others.If beforehand all
rium,regardless ofcost.Thenobserving a playersexpectthatv is less thansomev'
first-periodpunishment wouldconveyno withprobability r, thenwhenxt = 1 the
new information about the hegemon's hegemonwould punishif v < v' and
strength and ally2 wouldnotupdateits acquiesceotherwise. (Formoredetailsee
beliefsand would challengeeven if the Harsanyi1973.)We elaborateon therole
hegemon had punished.Sincecostlypun- ofsuchuncertain costsofcoercionin the
ishment in period1 wouldthenhave no oil priceexamplediscussedbelow.

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 AmericanPoliticalScienceReview Vol. 82

HegemonicDeclineand OtherResults a hegemonicregimecould declineafter

havingat firstsucceeded.(We assume
In orderto incorporate thehegemon's throughout whatfollowsthatthenations
uncertainty about futurecosts,we were involvedare in a situation corresponding
able todescribetheequilibrium onlyfora to case3".) First,theveryfactofrepeated
two-periodgame. However, thereare play can reducethepossiblescope of a
reasonsto believethatimportant proper- hegemonfor reputationbuilding,even
tiesof our resultswould stillhold in a without allieshavingbeeninitially wrong
gamewithmoreperiods.Suchan exten- in theirestimates ofw. Repetition reduces
sionwilloffer significantinsightsintothe thevarianceofW andincreases theircon-
relationship betweenreputation and the fidence intheirestimates.12 In thissense,a
declineofhegemonic regimes. reputational modelofa hegemonic regime
A Multiperiod Model?Krepsand Wilson contains within it possible sources of the
(1982a)modeledreputation buildingby a regime's ultimate disintegration without
predatory monopolist in a settingsimilar requiringfurtherargumentsabout un-
to ours,allowingforan arbitrary finite anticipated exogenouschange.
numberofrepetitions. Our resultsresem- Moreover, theuse of mixedstrategies
ble theirsclosely,withtwoimportant dif- by the players maybringaboutdecline.In
ferences. First, if the Kreps-Wilson our two-period model,ally 2 maychal-
monopolist everoncefailstopunish,then lenge even though thehegemon punished
thejig is up: all otherplayersknowfor a challenge by ally 1. In a multiperiod
certainthatthemonopolist cannotreally model (or indeed the Kreps-Wilson
affordto punishand (as a result)will model),thesamescenariocouldunfoldat
neverdo so again.In ourmodel,a hege- any time. The hegemonmay punish
monwho failsto punishin period1 may severaltimes,establisha reputation that
yetpunishin period2 ifx2 0. Second,
= deters some challenges, then be (ran-
our model,unliketheirs,exhibitssitua- domly)challenged, and(randomly) failto
tionsin whichthehegemonis so welloff punish, incurring further challenges from
thatit neednotworryaboutreputation, which it may be difficult or impossible to
as wellas circumstances inwhichreputa- recover. As we have seen, equilibrium
tion buildingis hopeless.In otherre- behaviorrequiresmixedstrategies; there-
spects,the Kreps-Wilson resultscorre- fore a rational hegemon must leave itself
spondcloselyto ours." Thesesimilarities open to this kind of hegemonic decline.
indicatethatif our modelcould be ex- Finally,theonsetof thelateperiodsof
tendedto arbitrary finitelength,it ought the gamemaybringaboutthedeclineof
to exhibitbehaviorsimilarto theKreps- theregimethrough thehegemon's loss of
Wilsonmodel.Forinstance, depending on reputation. With no updating, ally 2 hasa
parameter values,thehegemon's reputa- smaller chance of being punished than
tionmayendurefortheentiregame,or does ally 1, simply because only a costless
withtheapproachof thefinalperiodthe punishment willbe metedoutin thefinal
alliesmaybecomebolder.Ifthishappens, period. This makesally2 morewillingto
thehegemon mayresistat first,temporar- challenge, other things equal. Thiswould
ily reestablishingitsreputation. In other be an ongoing process. Challenges
cases, the hegemonmay give up early, become more and more attractive in the
and endurechallenges fortherestof the laterperiods, and under some conditions
game. obediencebreaksdown severalperiods
beforethe last. If therewere anything
HegemonicDecline. These resultsand resembling an "end of thegame"in real
extensions openup severalwaysinwhich life, this would providean additional

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 HegemonicStability

source of hegemonicdecline, again toughness,that is, an abilityto force

despitethefactthattheregimemayhave downoilpricesandwithstand thecostsof
workedperfectly wellinitially. prolongedperiodsof low pricesin order
Is theresuchan "endof game"?Inter- todeterfuture production byothers, both
nationalpoliticsis perhapsmoreaccurate- withinand outsideOPEC. We also give
ly characterized as an infinite-horizonevidencethattheirexpectedgainsfrom
game.Eventhougha regimemayendfor thisstrategyexceededany likelygains
exogenousreasons,theplayersneedhave fromalternative strategiesthathavebeen
no advance warningof it. Undersuch imputedto them.Finally,the1985price
conditions,theywill behave as though declineis one of a seriesof similarepi-
theyexpectthegameto go on forever but sodes involvingthe Saudis, some suc-
discount futurepayoffs duetouncertainty cessesandsomefailures, someattempts at
(as forexamplein Axelrod1984). If this punishment and someacquiescence, very
discounting is not too severe,thensuch much resemblingthe applicationsof
behaviormaylook verymuchlikeearly- mixedstrategies describedabove. Thus,
periodbehaviorin an incomplete infor- whatlooksfromsomeperspectives likean
mationgamewitha longbutfinitehori- episode of regimebreakdownappears
zon. Withheavierdiscounting, thestrate- insteadto us as thesortof event(chal-
giesresemble last-periodplayina finitely lenge,punish,acquiesce)thatdetermines
repeatedgame.Ifplayersreceivewarning thebasisoffuture regimecooperation in
that the game is likelyto end sooner an ongoing,oft-repeated international
ratherthanlater,the effectis precisely interaction.
thatof increasing therateat whichthey
discount thefuture.13 sucha
Strategically, Background
changein discounting shouldlook a lot
likeapproaching theendofa finite game. The Saudi actionin 1985 followeda
The pointis thathegemonic regimes may period of major changesin patternsof
declineas theyapproach,butbeforethey supply and demandforoil. As Figure3
actuallyreach,theexogenously imposed shows,Saudi productionthenstood at
end oftheline. about 2 millionbarrelsa day (mbd),
downfrom5 mbdjustovera yearearlier
and froma highof about 10 mbd five
An Example: yearsbefore.Indeed,fora briefmoment
The Price of Oil in 1985 Saudi Arabiawas no longerthe
world's largestproducer,thoughtheir
In the late summerof 1985, Saudi provenlow-costreserveswerestilllarg-
Arabiabegansubstantially increasing oil est.As Table1 shows,partofthisdecline
productionfor export,precipitating a intheSaudis'market sharewasa response
largedropin theworldpriceof oil. We to decreasedworlddemand,whichhad
applyourmodeltothisepisodetoanalyze fallenby over10% since1980.It also re-
the strategies pursuedby Saudi Arabia flectedincreasedproductionby non-
and othernationsas a qualitative illustra- OPEC nations (especiallyBritainand
tionof reputation buildingin hegemonic Norway).However,mostof thereduc-
relations.As we shall see, incomplete tion reflected the Saudis' majorrole in
informationand coercion costs play OPEC's effort to decreaseproduction to
majorrolesinthisepisode,inwhichSaudi shoreup thepriceofoil. The quotalevels
Arabiawas inthepositionofa hegemonic negotiated in late 1984 (whichprovided
actor.We giveevidencethattheSaudis' forOPEC production of nearly16 mbd)
goal was to establisha reputationfor broughtSaudi production down to just

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 AmericanPolitical Science Review Vol. 82

Figure3. OPEC Crude Oil Production Sea producers,Britainand Norway.

6 Saudi oil production doubledto
initially
MIllUnB/D over 5 mbd in summer 1986, though fol-
5 lowing furtherOPEC it
negotiations has
~~~~udi
Arabia
4- sincefallencloserto 3 mbd.Therewere
scatteredproductioncutsby othercoun-
3 iron n tries(bothOPEC members and nonmem-
bers but not Britainor, untilrecently,
Norway),and thepriceof oil fellfrom
Iraq Nigeo above$30 tobelow$10perbarrel,recent-
O . I A
I below$20.
ly fluctuating
1984 1985 1986
senior
Note. We are gratefulto J. L. Johnston, Interpretations
economist,AmocoOil Corporation, forsupplying
thisfigure. WhatmighttheSaudis have wanted?
Some (including, apparently, Saudi
propagandists) claimedtheysoughtto
over4 mbd.A yearlaterOPEC was still create structuraleconomicchangesto
producingatnearlythesameoutputlevel, increaseworlddemandforoil. Thiscould
butSaudiproductionhadbeenhalved.By be true,but onlyas a meansto increase
contrast,the combinedproductionof theirown revenues.Othersargue that
Norway and Britain(not membersof theywantto maximize market share(edi-
OPEC) had reached3.5 mbd by 1985, of torial,Wall StreetJournal,30 January
whichhalfwas exported.Theirexports 1986). Increasingmarketshareplays a
hadbeennegligible (lessthan.5 mbd)five roleinouraccount,too,butisnota moti-
yearsbefore. vation independentof price; for the
In December1985,theSaudisachieved Saudis alone can have thewholeworld
a majoritydecisionin OPEC to abandon marketat two dollarsa barrelfor 15
production
their joint price-stabilizing years. Alternately,journalist Henry
quotasandthreaten a pricewarwithnon- Jacoby("A Shock That OPEC Won't
OPEC producers, particularlytheNorth Overcome," New YorkTimes,26 January
1986)interpreted situation
thepresent as a
Table 1. WorldOil Production, dilemma,"withOPEC
"classicprisoners'
1980 and 1985 and non-OPECmembersable to benefit
jointlyfromreducedproduction but un-
Millionsof able to make bindingagreementsto
BarrelsperDay foregoproduction. Thus,he argued,the
SourceofOil 1980 1985 competitive outcomewillbe worseforall
producersthancontinuing OPEC quota
Exports cooperation;and the squabblingover
SaudiArabia 10 3
RestofOPEC 15 11 pricesandproduction theirinabil-
reflects
Non-OPEC 4 8 ityto enforcecooperation.
Totalexports 29 22 We believeinsteadthattheepisoderep-
resentsan effortto maintainan oil pro-
production
Indigenous 21 22 ducers'regimeunderSaudi hegemony.
Totalworlddemand 50 44 Hegemonytheorists wouldarguethatno
Note. We are gratefulto J. L. Johnston,
senior stableoil producers'
regimewas possible
AmocoOil Corporation,
economist, forsupplying unless backed by a "large"power. In
fromwhichthesedatawerecalculated.
figures markettermstheSaudisare certainly the

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 HegemonicStability

largestoil-producing nation. However, ingsof$60 millionperday.At thislower

theirpositionas swingproducer(accept- production level,theirreserveswouldlast
ingcutsin production to propup prices) longer.Indeed,giventhe scale of their
meantthat OPEC in late 1985 closely reserves, theSaudisshouldprefer suchan
resembled,in our terms,a hegemonic outcometocompetition without quotasat
"alliance."Could Saudi Arabia use its discountratesforfutureearningsbelow
superiorreservepositionto alterthedis- about3% per annum.Thus,theSaudis'
tribution of benefitsand restoreits pre- betterstrategy mightbe to competeby
vious positionwithinOPEC? This de- producing6 mbd,contrary to observed
pendson whether itis willingto bearthe behavior,thoughpossibledataerrors and
short-term costsofverylow oil pricesin uncertainty overdiscountratesmakethis
orderto maximizerevenuesin thelong a tentative conclusion.
run,andwhether othernations(including However,thisignoresthe possibility
thoseinOPEC) areconvinced ofthiswill- thattheSaudiscoulddeterfuture explora-
ingness.Ifso, theSaudi actionis a credi- tion and productionby establishing a
ble threatand detersentryor excesspro- reputationfor toughness,which they
ductionby some othercountriesafter coulddo in eithercase. Theywouldhave
pricesrise.14 to withstand a longenoughperiodoflow
First,the1985 pricefallis not an iso- oil pricestopersuadeothernations(oroil
lated episode. As Ahrari(1986) points companies)to deferexploration and in-
out, the Saudis have acted similarly on vestmentthroughthe threatof future
two previousoccasions,1977 and 1981. punishment (furtherperiodsoflowprices)
On those occasions, he argues, their withoutactuallyhaving repeatedlyto
initiativesfailedbecause marketcondi- carryoutthethreat.It wouldbe worthit
tionsremainedtight.This is consistent to dissuadeenoughexploration and in-
with our overallstresson viewingthe vestment to add evenas littleas 10% to
problemas one of repeatedinteraction, the long-run priceof oil. Withsuch an
andhighlights theimportance ofthehege- improvement, theSaudismight produce6
mon'suncertainty aboutthepriceelastic- mbdat $17 perbarrelundercompetition
ityofworlddemandforoil. or4 mbdat $25underquotas.16Theextra
Equallyimportant, theSaudiscan gain $10 millionper day thus gained from
morefromreputation thanunderother reputation wouldexceedthelikelydiffer-
cooperative outcomes.Forexample,pub- ence (withoutreputation) betweencom-
lishedestimates usingconventional analy- petitionand quotas.
sisofsupplyand demandshowedthatthe
Saudiscouldmaximize theirforeignearn- Costsof Coercion
ingsat about$65 millionperdaybypro-
ducing6 mbd at $15 per barrel,under Withtheirenormous low-costreserves,
conditionsapproximatingcompetition theSaudis'abilitytowithstand periodsof
without quotas(NewYorkTimes,19 Feb- low prices providesthe possibilityof
ruary1986).15Otherjournalists and ana- establishing a reputationfor toughness
lystsof the Wall StreetJournalargued fromwhichtheycan subsequently profit
thatOPEC would eventually reestablish -if theycan bear the costs of driving
quotas and speculatedthat the Saudis pricesdowntogetthatreputation. Before
wouldproduceabout4 mbdat $22 a bar- the fact,the Saudis may have believed
rel. (Above this price,apparently,the theycould affordthisstrategy. Recently
incentivesforcompetitive entryby many announcedaccountsshowthattheSaudis
small producersmultiplyrapidly.)This had a budgetdeficitof $13 billion,or
latterarrangement wouldgivethemearn- about $36 milliona day, whileearning

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 AmericanPolitical Science Review Vol. 82

about$50millionperdayfromoilin1986 Success,Failure,and MixedStrategies

(equaltotheearnings on about4.5 mbdat
$13 a barrel).Two pointsfollowfrom Even with this difficulty, the Saudis
this.First,thisrateofearningsis $10-$15 have done relativelywell so far. The
million per day below the industry August1986 OPEC agreement accorded
analysts'quoted estimatesof what the theman improvedquota. A numberof
Saudis could have made withoutestab- allies, both inside and outsideOPEC,
lishinga reputation.However,such a linedup production cuts.The speedwith
shortfall
sustained for6-12monthscould whichtheyfellintolinereflects thecostof
be madeup by exploiting reputationin a oilproduction anddesperation forforeign
coupleofyears.Certainly thedecisionsto currencies. Gabon and Ecuadorhave ex-
reduce explorationand investment by tremely highproduction costs,Mexicois
otherswould come quickly,while the deepindebt,andEgyptimports foodwith
pricebenefitsto the Saudis would last oil earnings.Thesecountries wereamong
longer.17 thefirstto cutproduction. Otherhigher-
Second,theprincipalcost of coercion cost producers(Algeria,Qatar, Libya,
to theSaudisis thedomesticdislocation Venezuela,andNigeria)clamored forcuts
producedby budgetdeficits or low gov- to shoreup prices.Those who lost sig-
ernment revenuesthrough theimpactof nificant revenuesonlywhenoil pricesfell
cheapoil. TheSaudisareunabletogener- below$15 a barrel,likeIndonesia,Iran,
ate enoughrevenuewithoil at $10-$15 Iraq,and theUnitedArabEmirates (Wall
per barrelto meet projecteddomestic StreetJournal,11 February1986), were
expenditures, needingto produce7 mbd lessvocal.
todo so evenat theupperendofthisprice The key"allies"wereBritainand Nor-
range.In theshortterm,theywoulddraw way,whoneither cutproduction norindi-
againsttheirmassive($100-billion) cash catedwillingness to discussit. Therethe
reservebuiltup in theflushyearsafter loweroil pricemeantforegonegovern-
1978whileattempting to establisha repu- mentrevenuesand possiblepublicbor-
tation.In thelongterm,theyapparently rowingor increasedtaxes (both coun-
needto produceabout5 mbdat $22 per tries),reducedpublic investment (Nor-
barrel (on which theynet nearly$88 way),anda lowerexchange rate(Britain).
milliona day)to balancethebudget.Our Both countriesvoiced similarclaims.
calculationsabove show that this was Britishspokesmenclaimedthat90% of
unobtainableunder any nonreputation NorthSea oil can be producedat fiveto
strategy butjustpossible(perhapsaftera eightdollarsa barrel(WallStreet Journal,
yearor two) at theprice-quantity com- 11 February1986). The Norwegians
binationsarisingunder an established claimedthatoilwouldflowat fivedollars
reputation fortoughness, In any event, a barrel, concedingthat exploration
theSaudistwiceannounced"deferral" of wouldstopat thatprice(WallStreet Jour-
a budgetin 1986,announcements treated nal, 24 January1986). Later,theysaid
by someanalystsas evidenceof "weak- that they would follow Britain'slead
ness" (highcost of punishment). While (Wall StreetJournal, 11 February 1986).
thereis no evidenceof seriousdomestic These claims,foundedin fixedcostsof
unrest(eliteor popular),Saudi planners production withno further recoveryof
privately stress that they expected old investment (New YorkTimes,7 Feb-
demandfor oil to rise fasterat lower ruary1986),represent an effort to call a
pricesand thustherevenueimpactto be bluff.Theyare therealequivalent ofour
smaller.18 model's "challenge,"in the beliefthat

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 HegemonicStability

Saudi production could not continueat ever,ifa hegemonic regime doesformas a

low prices. "mixedstrategy equilibrium," uncertainty
In factBritainand Norwayhad lessto aboutworldtrendswilllead to sporadic
loseintheshortrunthanmighthavebeen challenges fromallies(especiallyas con-
expected.Norway's public investment ditionschange) and possiblyultimate
loss willbe feltslowlyand was certainly collapse.
anticipatedby government planners.A
lower exchangerate would findmuch
supportamong Britishmanufacturers. Conclusion
The Thatchergovernment would not
want to raise domesticrevenuesin the We analyzeda game-theoretic model
runupto a generalelectionbut had two containing manyofthecentral features
of
yearsleftat thetime.19 The Britishalso hegemonicstabilitytheoryof regimes:
lacked controlover theiroffshoreoil asymmetry, distributionalconflict,costly
industry and maywellhavefeltthatany coercion,uncertainty, and instability.
cutstheymadewouldhavebeentoosmall Our resultsdependcruciallyupon the
to affectworldprices.Of course,itis also assumptions that(1) thereis incomplete
possible that impressingother OPEC information aboutthetrueabilitiesofthe
memberswas more importantto the hegemonand (2) thehegemonsometimes
Saudis thanany actualcutsobtainedin faces costs in coercingothersto coop-
NorthSea production. ThoughtheSaudis erate.Hegemonic instabilityin themodel
did relativelywell in the August1986 is a naturalconsequenceof uncertainty
negotiations, theysubsequently adopteda and mixedstrategies, whichrenderrepu-
softer position,acquiescinginproduction tationbothexploitable andchallengeable.
cutsto helpkeeppricesup. Withinour The model incorporates size differences
model,thiswould represent continuing amongparticipants by virtueof asym-
application ofa mixedstrategy, underthe metric information and asymmetric abili-
assumption that(domestic) costsofcoer- tiesto coerce.
cionhad becometoo largeto allowcon- Although the model uses specific
tinuedpunishment. As we notedabove, assumptions about the natureof uncer-
someevidenceis availableto supportthis tainty,it is importantto notice how
interpretation. generalin spirittheseassumptions really
In sum, potentialSaudi gains from are. The important factis thatthehege-
hegemony make theirinitiative compre- monknowsmoreaboutitsowncoststhan
hensible.In spiteofearlypredictions that allies know about the hegemon'scosts.
"the Britishwill talk, theyknow the No actor,noteventhehegemon, hasper-
Saudis can forcethepricedown"(Wall fect foresightabout futurecosts or
StreetJournal, 6 February 1986),a British actions.We haveemployed fairlygeneral
challengewas not necessarily irrational. distributional forms,and thereis no
Sinceequilibrium hegemonic regimes are reasonto believethatthesealoneaccount
possibleand the Saudis have enormous forthequalitative resultswe derive.Our
low-costreserves,theymay succeedin strongest assumption, really,is thatthe
establishing a hegemonic regime. Ifsucha hegemon andalliesareall completely cog-
regimeforms,theSaudisshoulddo well nizantof theinformation structureofthe
relativeto expectations based on perfect game, so thatdespitethe gaps in their
competition or alliancebehavior.If the knowledgethey can act strategically
regimedoesn'tformnow, thediscussion againstone another.The resultof this
ofhegemony in theprevioussectionsug- strategic interaction is expressedin our
geststhattheSaudiswilltryagain.How- resultson equilibrium in the hegemony

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 AmericanPolitical Science Review Vol. 82
game.Sincetheequilibrium is Bayesian,
we have accountedforrationallearning
by the players upon observingone
anothers'actions. The expectationsof
eachplayerareconsistent
withtheactions
of theotherplayers.This equilibriumis
robust,thoughnotunique.
Implications
forHegemonicStability
Our resultshaveseveralimportant im-
plicationsforhegemonic stability
theory.
Most notably,althoughours is a result
about "stability"in thesenseof equilib-
rium,it demonstrates exactlyhowand in
what circumstances hegemonicregimes
mightbreakdownor appearunstable.In
situationslikecases 1 and 2, stabilityis
completeand lasting.In case 4 thehege-
mon getsno respectand punishesonly
whenit is costlessto do so. In a model
with a more complexinformation and
cost structure,such behaviormightap-
pear as intermittent cooperationby the
allies,dependingon theinformation they
haveaboutthehegemon's costsinspecific
situations.Indeed,one can extendthis
analysisto predictions ofdecliningsever-
ityof punishments over timeas a hege-
mon's reputation becomesbetterestab-
lished,as wellas predictions of therela-
tive durabilityof hegemonicand non-
hegemonic regimes.20
More interestingly, in case 3 the ap-
pearanceof instability resultsfromthe
incentivefora rationalally to challenge
thehegemon.In addition,thehegemon
punisheschallengesusinga mixedstra-
tegy;and theallyusesa mixedstrategy to
decidewhether to respondto a previous
punishment.Thus, even though the
generalcostsand information parameters
ofthegameremainconstant, theequilib-
riumstrategies call forpurposelyerratic
behaviorby hegemonand allies. Such
behavioris necessary to keepone'soppo-
nentsguessingand (forthehegemon)to
take optimal advantageof the allies'
learningprocess.The resultis thatthe
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regime willappeartofollowa rockyroad,
with allies sometimeschallengingthe
hegemonand at othertimesobeyingand
with the hegemonsometimesapplying
costlypunishments and sometimes acqui-
escing.Equilibrium behaviorin thehege-
monygamenecessarily implieshegemonic
instability.
usefulto realizethat
It is particularly
thebehaviorinvolvedin thisinstabilityis
in no way attributable to "mistakes"of
anykindon thepartofanyoftheactors.
Only by contemplating mixedstrategies
can theactorsbe satisfied thattheirown
plans are consistent withtheirexpecta-
tionsabouttheiropponents.Alliesocca-
sionallychallengeand endurepunish-
ments,and the hegemonoccasionally
neglectsto punish,randomly butnotir-
rationallyor unexpectedly. The natureof
hegemonic is thuspredictable
instability
in the contextof the game-theoretic
model.
Choicein HegemonicRelations
Effective
Several authors, notably Keohane
(1984),have drawnan analogybetween
regimesand cooperationin therepeated
two-player prisoner'sdilemmagame.But
thisgame,evenwithadded assumptions
of incomplete information (Krepset al.
1982),does not reflect theeffects of size
differences or asymmetricabilitiesto
punish.Thus manyof theresultsof our
modelofreputation standinmarkedcon-
trastto thebehaviorthatAxelrodiden-
tifies
as "effectivechoice"intheprisoner's
dilemma(1984,chaps.6, 9).
First,a successfulprisoner'sdilemma
playershouldpracticea "nice"strategy,
thatis,neverbe thefirst todefect.In con-
trast,a successful strategyforan allyin
the reputation game mustinvolvechal-
lengingtheleaderaccordingto a mixed-
strategy plan. Failureto do so allowsthe
hegemonto taketoo muchadvantageof
thealliesbycommanding theirobedience,
even when they ought to have the
 HegemonicStability

strength to resist.Iftheregime consistsof dilemmaproblemstheirmembersface.

a hegemonenforcing mutually beneficial Thiswillnotbe a characteristic of hege-
collectiveaction, then such resistance monicregimes, in whichtheexistence of
maynot,overall,be advantageous. How- at leastsomeuncertainty is beneficial to
ever, if in the processthe hegemonis the hegemon.The hegemonwill dis-
demanding privatebenefits then seminateinformation
foritself, beneficialto it-
any successful challengeby an ally is to self,but repressinformation thatmight
theally'slong-and short-run gain. serveto informallies of the hegemon's
Second,a successful strategy in Axel- truecosts of punishing.The hegemon's
rod'sschemehad tobe "provocable," that incentive
topreserve others'uncertainty is
is, willingto retaliateagainstany trans- clearin theOPEC case discussedabove.21
gression.The successful hegemon, on the
otherhand,shouldinsomecircumstances
acquiesceto challenges fromitsallies.In OtherImplications and Extensions
cases1 and4 ofourdescription ofequilib-
rium,thisis obvious.Butevenin case 3, These resultsclearlydemonstrate the
whenthe hegemonis engagedin active potentialusefulness of advancedgame-
reputation building,theequilibrium stra- theoreticmodelsin the studyof inter-
tegyrequiresthe hegemonto acquiesce nationalrelations. Byexplicitly modeling
withprobability 1 - r if punishment is the sequentialfeaturesof the game (as
costly. Too much provocabilitywill advocatedby Snidal[1985b]and Wagner
weakenthehegemon'sabilityto builda [1983])and theincompleteness of infor-
reputation, becausetheallieswillregard mation,one can motivatesuchphenom-
punishment from a relatively"weak" ena as reputation and, in our case, in-
hegemon as beingso likelythatwhenthey stability.Behaviorpreviouslytreatedas
do observea punishment, theydo not extratheoretic "situational"featurescan
reducetheirestimates ofw byverymuch. thus be incorporated as endogenously
Third, Axelrod'sprescription that a arisingphenomenain a rationalactor
successful strategy be "simple,"thatis, model.This allows thestudentof inter-
easy foropponentsto detectand under- nationalrelations toanalyzereputation in
stand,mustbe qualifiedin an important thesamestrategic, rationalchoiceterms
way forthisreputation game.Bothhege- so usefullyapplied to the analysisof
monand alliesmustuse mixedstrategies cooperation and conflict.
undercertaincircumstances. Too much The generalnatureof the reputation
straightforwardness can reducea hege- problemmodeledheregives the results
mon'sabilitytocultivate a reputation and muchbroaderapplicability as well.Exam-
an ally's abilityto resistthe hegemon's ples can be foundin securitypolicyas
threats.Ifa hegemon is weak,thenbuild- wellas trade.22 Butapplications ofreputa-
ing a reputation requires that the hege- tionalmodels (and, by implication, hege-
mon cultivateratherthan alleviatethe monicregimes) arebyno meansrestricted
opponents'uncertainty.And benefit- to theinternational arena.Domesticap-
maximizing alliesmustnot allow sucha plicationsincludelegislativeleadership
hegemonto be completely confident that (Calvert 1987), predatorypricingand
a fewquickpunishments willscareoffall entrydeterrence in markets(Krepsand
future challengers. Wilson1982a),monetary policymanage-
Finally,Keohane(1984) suggeststhat ment(Barro1986), thepoliticsof labor
"collectiveaction"alliance-type regimes union relationswith management, and
formand disseminate information as a the between
relations a politicalparty and
majormeansofovercoming theprisoner's organizedinterest groups.

461

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 AmericanPolitical Science Review Vol. 82

Some naturalextensions of themodel Appendix:Sketchof Proof and

couldyieldfurther interestingresults.As Propertiesof Equilibrium
noted above, allowing the actors to
receivespecificinformation about indi- This appendix describesthe steps
vidualsituations, thatis,aboutindividual neededto provethatthe description of
periodsinthegame,wouldfurther illumi- equilibrium foundin thetextis indeeda
natethenatureof hegemonic instability. sequentialequilibrium. Afterthat,it ex-
Especiallyforthispurpose,it would be plainsbriefly whyall reputation-building
usefulto allow a longerhorizonin our equilibriain thisgamerequiretheuse of
varyingcostsgame.Further, morecould mixedstrategies. More detailsare avail-
be learnedaboutthekindsofcooperation able fromtheauthorson request.
thata hegemon canachieveifwe modeled We will use the followingadditional
reputation withinthecontextofa collec- notation:Let q be the probability with
tiveactiongame,withthepossibility that whichally1 challenges. LetSo, sA, andsp
the hegemon'spunishments may be im- represent theprobability withwhichally
possibletofocuson a particular offender, 2 challenges giventheoutcomeofperiod
as is trueintheoil priceconflict described 1: obedience, acquiescence to a challenge,
above. Sucha modelmightalso illustrate and punishment of a challenge,respec-
cooperationproblemsfaced by allies, tively.Let ro be the probabilitywith
who couldjoin together in smallercoali- whichthehegemonpunishesa challenge
tionsto challengethehegemon.Finally, by ally1 ifpunishment is costless;r1the
assuminguncertainty on the hegemon's probability of punishing ally 1 ifcostly;
partabout theallies' costs and benefits and r2theprobability ofpunishing a chal-
would further clarifythe natureof the lengeby ally 2 if costless(obviouslyno
allies'strategic opportunities. costlypunishment is everrationalin the
Even withoutthesefurther considera- finalperiod).LetPi be ally1's subjective
tions,ourmodelhasa number ofinterest- probability of punishment, a function of
ingfeatures. It subsumesa dimension of thehegemon's strategy(roandri).Finally,
conflict froman empire(inwhicha hege- let po, p2p, and p2 be ally 2's subjective
moneasilymonitors opponents' behavior probabilities of being punished,condi-
and punishescostlessly, obtaining nearly tionalon theoutcomeofperiod1.
all thegainsfromitsregime) toan alliance Firstnotethat,in all fourof thecases
(in whicha hegemonmay so value the (rangesof b) describedin thetext,sA >
good producedby theregimethatit is sp; thereforero = 1 since a costlesspun-
providedpractically regardless of coop- ishment in period1 has a positivedeter-
eration,sharingbenefits widely).Evenat renteffect. Notealso thatthehegemon is
themarginofthesepolartypes,as wellas indifferentabout punishingin period2
anywherein between,thereis room to whenitis costlesstodo so; therefore r2=
createand exploitreputation. Similarly, 1 is acceptable.It remainsto derivebest
themodelimpliesthatalliesdo notchal- responsefunctionsforq, r1,so, SA,and sp.
lengesimplyforthesake of finding out Step1 is to derivethehegemon's basic
thehegemon'struenature.And, indeed, responsefunction forr1.This is accom-
themodelemphasizesthehegemon'sin- plishedfairlysimplybywriting thehege-
centivetolimitthedissemination ofinfor- mon'sexpectedutilityfortheremainder
mationin orderto continueexploiting ofthegamefromusingr1,giventheother
uncertainty, as wellas to continuetrying players'strategies, whenally 1 has just
(whilealliescontinue probing)to createa challengedanditis costlytopunish.Then
regimeexploitingreputationaleffects. maximizethisexpression withrespectto
Further extensions and applications r1.
shouldproverewarding. Step2, theeasiest,is to deriveallyi's
462

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 HegemonicStability

best responseforq, givenr1,again by equilibria canbe ruledoutbyputting con-

maximizing ally1's expectedutility. ditionson the"reasonableness" ofbeliefs
Step3, calculating ally2's bestresponse in equilibrium (see Calvert1987).
functions, is a bit moreinvolved.First, Third,thehegemonis freeto maker1
calculatep0, pA, and pipusingrl,a, and (or r2,forthatmatter)dependupon w
fi.Noticethatally2 mustusetheprevious ratherthanbeingconstant.23 Sucha strat-
moves,alongwithr1,to updatethesub- egywouldrequirethatbothalliesalso use
jectivedistribution of W accordingto different strategies, even if theexpected
Bayes'rule.Next,foreach outcomeh e valueofr1is stillr. To see why,consider
{ 0, A, P} use thecalculatedvaluesofph ally i's expectedpayoffwhentheprob-
towriteally2's expected utilityfromchal- abilityof punishment, when costly,is
lengingwithprobability Sh. Finally,for QLO(W):
each h maximizeally2's expectedutility
withrespectto shgivenr1. E{[1 - Q1(W]Wb
Finally,step 4 is to look at the four + [1 -W + WeQ(W)](b -1)}.
cases of therangeof b, verifying in each
case thatthestrategies givenin thetext Since E[We1(W] * EW . EQ1(W), the
simultaneously satisfyall the best re- payoffs toally1'sresponses canbe chang-
sponsefunctions calculatedin steps1-3. ed whilekeepingEeL(W = r.Similarrea-
Thisprovesthatthegivenstrategies form soningappliesto ally2. Thisgivesriseto
a Bayesianequilibrium. a largesetofalternative equilibria;how-
In provingthatthisBayesianequilib- ever,all oftheminvolvetheuse ofmixed
riumis a sequential equilibrium, onlycase strategies by ally 2. Althoughthehege-
2 causesa problem:ifally1 unexpectedly mon's strategy is technically pure,itlooks
challengesand if the hegemonunex- toanyobserver, including theanalystand
pectedlyacquiesces, then the denom- ally2, likea mixedstrategy sincethetrue
inatorin Bayes'formula is undefined and valueofw is unobservable.
we cannotcalculatepAand deriveally2's Fourth, sincethehegemon is indifferent
bestresponse.Thisis remedied bysetting about applying a costless punishment in
pA= f3/(a + ,3 + 1); such a beliefis pro- the final period, there are other equilibria
ved consistent by usingthefollowing se- in whichr2< 1. We mightimaginethat,
quenceof strictly positivestrategies for therebeingno realfinalperiod,thehege-
thehegemon:foreachn = 1, 2, . . ., let monreallywouldhave a positiveincen-
rO= 1 - 1/n2,and let r n = 1- 1/n. tiveto punishcostlessly. Thisamountsto
(Fordefinitions of thesetermssee Kreps addinga (small)positivepayoff e forsuch
and Wilson1982b.) "costless"punishments. Such a payoff
There are other, more complicated eliminates thepossibility thatr2< 1, but
equilibria in this game that also exhibit now, as itturns out, r1 is forced todepend
reputation building.All of them,how- on w. Equilibrium can stillbe derived
ever,involvemixedstrategies. Alterna- usinga similarproof,but thedetailsare
tive equilibriamay arise in fourways: considerably morecomplicated (contrary
First,trivially, at the of
boundaries cases to the conjecture in Calvert 1987).
1, 2, and 4, somemixed-strategy equilib-
ria mayalso arisedue to theindifference
of a playerbetweentwo purestrategies. Notes
Second, thereare "mirror-image" equi-
libriainwhichally2 setsSA < sp incases theAn earlierversionof thispaper was deliveredat
1986 annual meetingof the Midwest Political
2 or3, andthehegemon mustacquiescein Science Association, Chicago. The authorsbenefit-
orderto "deter"ally 2. Such perverse ted fromthe commentsof David Baron, JohnFere-

463

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 AmericanPolitical Science Review Vol. 82
john, Robert Keohane, David Laitin, Ian Lustick,
JamesMorrow, Michael Munger,KennethShepsle;
fromthe internationalrelationsworkshops at the
Universityof Illinois and the Hoover Institution,
Stanford;and fromthepoliticaleconomyworkshop
at WashingtonUniversity.We are gratefulfor the
supportof the National Science Foundationunder
GrantSES85-12037.
1. Whether applied to international trade,
finance,or defense,the"theoryof hegemonicstabil-
ity" holds thatregimessurviveonly if backed by a
hegemonicpower.
2. By assumingthe initial asymmetryof hege-
mon and ally and explicitlymodelingthe strategic
problemof thehegemonin achievingand maintain-
ing a reputationforwillingnessto engage in costly
retaliation,thepresentstudygoes beyond theexist-
ing internationalrelations literatureon "threat
power"(Bramsand Hessel 1984), "capability"(Maoz
1983) and "resolve" (Allan 1983; Cioffi-Revilla
1983).
3. For instance,SteinremarksthatKindleberger,
Gilpin, and Krasner "all mentionthat a hegemon
uses inducementsand force.... The hegemonmust
get othersto agree. . . . Withoutagreementsthere
can be no regime.Such accords typicallyrequirethe
hegemon to make importantconcessions" (1984,
356-59).
4. An influentialearly example is Schelling
(1960, esp. 24-27, 119-50), and regime stability
theorists have often taken the same approach
(Downs, Rocke, and Siverson1985; Jervis1985, 61,
69, 73-78; Snidal 1985a, 600; Snidal 1985c, 931).
5. Our modelis a generalizationof thatofKreps
and Wilson (1982a) for the special case of a two-
period game, as explained below. Every game of
incompleteor asymmetricinformationessentially
involves problemsof reputation.Some of the eco-
nomic theory literatureclosest to our concerns
includes: Fudenbergand Kreps 1985 on reputation
buildingby a monopolistfacinga varietyof poten-
tial competitors;Rubenstein1985 and Grossman
and Perry 1986 on bargainingunder asymmetric
information;Sobel 1985 on the establishmentof
credibilityin ongoingsignalinggames; and Fuden-
bergand Tirole1986 on a "war of attrition"in which
two duopolists attemptto convince each other to
exit from an industrythat cannot support them
both.
6. We treattheseallies as two different
players,
although in fact our model does not distinguish
betweentwo allies, each makingone decision,and a
single ally making two decisions sequentially.See
Calvert1987.
7. Formally,each xt has the Bernoullidistribu-
tionwithp = w. In thisway we relax the assump-
tion of Kreps and Wilson (1982a) and othersthat
hegemonic sanctions are either always costly or
always costless. In contrast,our model allows this
cost to vary in a way betterunderstoodby thehege-
464
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mon than by its allies. This generalsituation,the
"chain storeparadox," was firstanalyzed by Selten
(1975, 1978).
8. The beta distributionis a flexibledistribu-
tionalformon theunitinterval.It describesthelimit
of infiniterepeatedsamplingfroma Bernoulli(zero
or one) population. When samplingfrom such a
populationwithprobabilityw of obtaininga "one,"
the beta distributionhas parameters(x and ,3 such
that its mean, E(W) is equal to ca/(a + p3).The
variance of W is aci/l(ca + 3)2(ci+ 3 + 1)]. The
values of ca and is may be any positive numbers
(DeGroot 1970, 35). To grasp the roles of ca and A,
considerBayes' ruleforupdatinga beta prior.If the
initialparametersare (a,,() and a "one" is observed,
a becomes a + 1, increasingthemean; ifa "zero" is
observed,,3becomes,3 + 1, decreasingthemean. In
a loose sense,then,a givesthenumberof "1's" and fi
the numberof "0's" in previousobservations.
9. An ally in case 2 who began withan estimate
of w just below the upper thresholdwould assume
that acquiescence indicateda high cost of punish-
ment.It would therefore add one to ca,givinga new
estimateof w = 03/(c+ ,3 + 1), whichis by defini-
tionof thiscase less thanb, so it would now be pre-
pared to challenge.
10. Althoughours is not the unique equilibrium
in thisgame,all but one of theothersalso requirethe
use of mixedstrategies.See theAppendix.
11. Their model, too, requiresthe use of mixed
strategiesin equilibrium.There, also, the oppor-
tunitiesforreputationbuildingvarywiththegame's
parameters;and theresultshold withany combina-
tionof severalallies, each makingseveraldecisions.
12. For instanceassume initialvalues of two for
each of ca and j3, so that E(W) = .5 initially(the
cutoffbetweencases 2 and 3) and the boundaryof
case 4 = .6 (see Figure2). Assumean ally'spayoffof
.58, puttingthisally squarelyin case 3. Then, after
several observations of punishmentand acqui-
escence,both a and j3could have increasedby two,
leavingE(W) unchangedat .5, butreducing(a + 1)/
(a + , + 1) to .55, placingtheally in case 4 (always
challenge).
13. For example,thehegemonmay lose itsasym-
metricalabilityto punish,as describedforexample
by Keohane (1984, chap. 9). Or thecollectivegood
producedand distributed by theregimemay lose its
value. Allies can observethesechangesand become
aware thatrandomshocksare now morelikelythan
beforeto put an end to theregime.
14. This is an aggressivestrategy,but theirpre-
vious exploitationwithinOPEC shows thatalterna-
tive "nicer"side-paymentstrategieswould not suc-
ceed in inducingcooperation,nor would any alter-
native (for instance,military)capacities allow the
Saudis the same leadershippossibilities.
15. Saudi Arabia consumes1 mbd of itsown oil.
Assumeit costs$2 perbarrelto produce.Theirearn-
ings = (production - domesticconsumption) X
 HegemonicStability
(sale price - productioncost). Then in thisscenario
theSaudis will earn 5 (= 6-1) X $13 (= 15- 2),
or $65 millionper day.
16. UndercompetitionwithreputationtheSaudis
make $75 million a day (5 X $15). Under quotas
withreputationtheycould make $69 million-(4 -
1) X ($25 - 2), or 3 X 23. Again, sincelowerpro-
duction lasts longer,we can treatthe Saudis as in-
different between the presentvalues of these two
alternatives.
17. For instance,virtuallyall U.S. oil companies
reducedcapital spendingforexplorationdrastically
in 1986. Moreover,many decisionsare irreversible.
Forexample,thereopenpriceofmanystripperwells
thatwere profitableat $30 per barrelis at least $50
per barrel. Indeed, Sheik Yamani himselftook the
trouble to stress this point (New York Times, 25
March 1986).
18. A complicationis that the Saudis have only
one instrumentof punishing,driving down the
world price of oil, so theycannot targetretaliation
against individual opponents. In our model, the
punishmentof an ally harmedonly thatally. Also,
some of the Saudis' usual "friends"also suffercon-
siderablyfromlow oil pricesand may threatenvio-
lence againstthe Saudis. Moreover,at pricesbelow
approximately$15 a barrel,oil competesfavorably
withEuropeancoal and U.S. naturalgas industries,
multiplyingthe number of "enemies" the Saudis
face.
19. Moreover, their oil royaltiesare only col-
lected on productionabove a fair recoveryprice,
probablyin thelow twentiesformostNorthSea oil,
so significantrevenueswere unlikelyto reaccrueat
any oil price likelyin the near term.
20. We are gratefulto Jim Morrow (personal
communication)forthesesuggestions,as well as the
exampleof Warsaw Pact relationsforthepossibility
of decliningseverityover time.
21. For instance,it was a year afterthe budget
deferralbeforefiguresbecame public. Moreover, it
was hard to tellhow much oil theSaudis were pro-
ducing. On one day in earlyMarch 1986, the Wall
Street Journal and New York Times contained
claims (respectively)that Saudi production had
declinedand increased.Innovationsin netbackcon-
'tracting(which provide for paymentto crude oil
producersat ratesdependenton theultimatemarket
prices of refinedproducts) meant that the Saudis
(who observe theirown portfolioand cash flow)
knew farbetterthananyone else at what pricetheir
oil was being sold.
22. For example,in February1985 theNew Zea-
land governmentrefused a U.S. request for a
destroyerBuchanan to pay one of its ports a call.
The U.S. retaliatedby declaringthe ANZUS treaty
no longerbindingso as not to set a precedentthat
could be followedby "allies that really count, the
ones in NATO and, of course,Japan"(Washington
Post, 26 February1985).
465
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23. The authorsare gratefulto David Baron for
clarifyingthisissue.
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JamesE. Alt is Professorof Government,HarvardUniversity,Cambridge,MA 02138.

Randall L. Calvertis Associate Professorof PoliticalScience,Universityof Rochester,
NY 14627.
BrianD. Humes is AssistantProfessorof PoliticalScience,MichiganStateUniversity,
East Lansing,MI 48824.

466

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