Trustees of Princeton University

Explaining Cooperation under Anarchy: Hypotheses and Strategies

Author(s): Kenneth A. Oye
Source: World Politics, Vol. 38, No. 1 (Oct., 1985), pp. 1-24
Published by: Cambridge University Press
Stable URL: http://www.jstor.org/stable/2010349 .
Accessed: 20/09/2011 21:10

Your use of the JSTOR archive indicates your acceptance of the Terms & Conditions of Use, available at .
http://www.jstor.org/page/info/about/policies/terms.jsp

JSTOR is a not-for-profit service that helps scholars, researchers, and students discover, use, and build upon a wide range of
content in a trusted digital archive. We use information technology and tools to increase productivity and facilitate new forms
of scholarship. For more information about JSTOR, please contact support@jstor.org.

Cambridge University Press and Trustees of Princeton University are collaborating with JSTOR to digitize,
preserve and extend access to World Politics.

http://www.jstor.org
 EXPLAINING COOPERATION
UNDER ANARCHY:
and Strategies
Hypotheses
By KENNETH A. OYE*

I. INTRODUCTION

N ATIONS dwell in perpetualanarchy,forno centralauthority

imposes limitson the pursuitof sovereigninterests.This common
condition gives rise to diverse outcomes. Relations among states are
marked by war and concert,arms races and arms control,trade wars
and tarifftruces,financialpanics and rescues,competitivedevaluation
and monetarystabilization.At times,the absence of centralized inter-
national authorityprecludes attainmentof common goals. Because as
states,theycannot cede ultimatecontrolover theirconduct to an supra-
national sovereign, they cannot guarantee that they will adhere to
their promises. The possibilityof a breach of promise can impede co-
operationeven when cooperationwould leave all betteroff.Yet, at other
times,states do realize common goals throughcooperation under an-
archy.Despite the absence of any ultimateinternationalauthority,gov-
ernmentsoften bind themselvesto mutually advantageous courses of
action. And, though no internationalsovereignstands ready to enforce
the terms of agreement,states can realize common intereststhrough
tacit cooperation,formalbilateraland multilateralnegotiation,and the
creation of internationalregimes. The question is: If internationalre-
lationscan approximateboth a Hobbesian stateof natureand a Lockean
civil society,why does cooperation emerge in some cases and not in
others?'
The contributorsto this symposiumaddress both explanatoryand
prescriptiveaspects of this perennialquestion. First,what circumstances
favor the emergenceof cooperationunderanarchy?Given the lack of a
* I am gratefulfor commentsby JeffFrieden, Ralph Ginsberg,JoanneGowa, Stephen
Krasner,David Lake, Timothy McKeown, Paul Quirk, ArthurStein, and the othercon-
tributorsto this volume.
The essays presentedhere focus on nation-statesas primaryactors in world politics,
treat national preferencesas sovereign,and assume that any ultimateescape from inter-
nationalanarchyis unlikely.Our focusis on non-altruistic
cooperationamong statesdwelling
in internationalanarchy.
2 WORLD POLITICS

centralauthorityto guaranteeadherenceto agreements, whatfeatures

encourageor permitstatesto bindthemselves
of situations to mutually
beneficialcoursesof action?What featuresof situationsprecludeco-
operation?Second,whatstrategiescan statesadopttofostertheemergence
of cooperationbyalteringthecircumstancestheyconfront? Governments
need notnecessarilyacceptcircumstances as given.To whatextentare
situationalimpediments to cooperationsubjectto willfulmodification?
Throughwhathigherorderstrategies can statescreatethepreconditions
forcooperation?
The problemof explainingand promoting internationalcooperation
encompasses manyoftheprincipalquestionsinthedisciplines ofpolitical
economyand securitystudies.However,divergent terminologicalcon-
ventionsand substantive applicationshave impeded the comparison of
answers.In the essayspresentedhere,a unifiedanalyticframework,
derivedfromelementary game theoryand microeconomics, has been
superimposedon cases in international securityand economicaffairs.
This use oftheaustereabstractionsofgametheory and microeconomics
offersseveral advantages.2First,superficialdifferencesoftenobscure the
parallelismof questions,explanations,and prescriptionsin the two fields.
By reducing concepts to fundamentals,the use of elements of game
theory and microeconomics permits ready identificationof parallels.
Second, intrinsicdifferencesbetween the politicsof war and the politics
of wealth and welfare may give rise to divergent explanations and
prescriptions.A unified analyticframeworkfacilitatesexplicit recogni-
tion of differencesin the extent and causes of, and prospects for, co-
operation in securityand economic affairs.Finally, uneven intellectual
developmentmay give rise to divergentexplanationsand prescriptions.
A unified analytic framework fosterstransferenceof useful concepts
between the fields.3
In this introductoryessay, I submit that threecircumstantialdimen-
sions serve both as proximateexplanationsof cooperationand as targets

2 In this essay, I use elementarygame theoryin a purely instrumentalfashion.First,

although some referencesto the formalliteratureare provided,the textdoes not furnish
formalproofson the existenceor location of equilibriumpoints in differentcategoriesof
games. As Thomas Schelling notes, the equilibrium solutionsidentifiedby formalgame
theoristsmay stabilizeconvergentexpectationsamong mathematicians, but unless equilibria
can also be reached through"alternativeless sophisticatedroutes,"such solutionsmay have
littleinfluenceon internationaloutcomes.See Schelling,The Strategyof Conflict(London:
OxfordUniversityPress, i963), II3-I4. Accordingly,the contributorssearchfor"alternative
less sophisticatedroutes" to reach mutuallybeneficialequilibrium points and for simple
strategiesto restructuresituationsto createmutuallybeneficialequilibriumpoints.
3 For an extendeddiscussionof the uses and abuses of game theoryin the empiricalstudy
of internationalpolitics,see Duncan Snidal, "The Game Theoryof InternationalPolitics,"
in this collection.
 EXPLAINING COOPERATION UNDER ANARCHY 3

oflonger-termstrategiesto promotecooperation.Each of thethreemajor

sectionsof this piece definesa dimension,explains how that dimension
accounts for the incidence of cooperationand conflictin the absence of
centralized authority,and examines associated strategiesfor enhancing
the prospectsfor cooperation.
In the section entitled "Payoff Structure: Mutual and Conflicting
Preferences,"I discuss how payoffsaffectthe prospectsfor cooperation
and present strategiesto improve the prospectsfor cooperation by al-
teringpayoffs.Orthodox game theoristsidentifyoptimal strategiesgiven
ordinally defined classes of games, and their familiarinsightsprovide
the startingpoint for the discussion.4Recent works in securitystudies,
institutionalmicroeconomics,and internationalpolitical economy sug-
geststrategiestoalterpayoffstructuresand therebyimprovetheprospects
for cooperation.5
In the next section,entitled"Shadow of the Future: Single-playand
Iterated Games," I discuss how the prospectof continuinginteraction
affectsthe likelihood of cooperation;6examine how strategiesof rec-
iprocitycan provide directpaths to cooperativeoutcomes under iterated
conditions;7and suggeststrategiesto lengthenthe shadow of the future.8
In addition,thissectionshows thatrecognitionand controlcapabilities-
the abilityto distinguishbetween cooperation and defectionby others

4For the definitiveclassificationof ordinallydefinedgames, see Anatol Rapoport and

Melvin Guyer, "A Taxonomy of 2 X 2 Games," GeneralSystemsii (i966), 203-I4. For an
extended reinterpretation of crisis bargainingin light of payoffstructures,see Glenn H.
Snyder and Paul Diesing, ConflictAmongNations:Bargaining,Decisionmaking, and System
Structurein InternationalCrises(Princeton:PrincetonUniversityPress, I977).
5 For examples, see Robert Jervis,"Cooperation under the SecurityDilemma," World
Politics30 (JanuaryI978), i67-214; Oliver E. Williamson,"Credible Commitments:Using
Hostages to SupportExchange,"AmericanEconomicReview(Septemberi983), 5I9-40; John
Gerard Ruggie, "InternationalRegimes,Transactions,and Change: Embedded Liberalism
in the Postwar Economic Order," in StephenD. Krasner,ed., International Regimes(Ithaca,
N.Y.: Cornell University, Press, i983).
6For orthodox game-theoreticanalyses of the importanceof iteration,see R. Duncan
Luce and Howard Raiffa,Gamesand Decisions(New York: Wiley, I957), Appendix 8, and
David M. Kreps, Paul Milgram,JohnRoberts,and RobertWilson, "Rational Cooperation
in Finitely-RepeatedPrisoner's Dilemma," Journalof Economic Theory27 (August i982,
245-52. For the resultsof laboratoryexperiments,see Robert Radlow, "An Experimental
Study of Cooperation in the Prisoner'sDilemma Game," Journalof ConflictResolution9
(Junei965), 22I-27. On theimportanceof indefiniteiterationto theemergenceofcooperation
in business transactions,see Robert Telsor, "A Theory of Self-EnforcingAgreements,"
Journalof Business53 (Januaryi980), 27-44.
7On how iteratedPrisoners'Dilemmas environments literallyselectforTit-for-Tatstrat-
egies, see Robert Axelrod, The Evolutionof Cooperation(New York: Basic Books, i984).
For a formal statementon the effectsof reciprocityon equilibrium outcomes in iterated
games, see Drew Fudenberg and Eric Maskin, "The Folk Theorem in Repeated Games
with Discounting and with IncompleteInformation,"Econometrica,forthcoming.
8 On enhancing iterativeness throughdecompositionof payoffsover time,see Schelling
(fn. 2), 43-46, and Axelrod (fn. 7), I26-32.
4 WORLD POLITICS
and torespondin kind-can affect
thepowerofreciprocity,
and suggests
strategiesto improve recognitioncapabilities.9
In the thirdsection,"Number of Players: Two-Person and N-Person
Games," I explain whycooperationbecomesmore difficult as thenumber
of actors increases; presentstrategiesfor promotingcooperation in N-
actor situations; and offerstrategiesfor promotingcooperation by re-
ducing the number of actors necessaryto the realization of common
interests.Game theoristsand oligopoly theoristshave long noted that
cooperation becomes more difficultas numbers increase,and their in-
sightsprovide a startingpoint fordiscussions Recent work in political
economy focuseson two strategiesforpromotingcooperationin thorny
N-person situations:functionalistanalystsof regimessuggest strategies
for increasingthe likelihood and robustnessof cooperationgiven large
numbers of actors;" analystsof ad hoc bargaining in internationalpo-
liticaleconomysuggeststrategiesof bilateraland regionaldecomposition
to reducethenumberofactorsnecessaryto therealizationof some mutual
interests,at the expense of the magnitude of gains from cooperation.12
Each of the threecircumstantialdimensionsservesboth as an expla-
nationof cooperationand as a targetof strategiesto promotecooperation.
The concluding sectionof this essay provides a roadmap to our efforts
to test these preliminaryexplanations and strategies.By applying this
common analytic frameworkto cases in economic and securityaffairs
and by searchingfor explicitparallels and differencesin the incidence,
causes, and prospectsforcooperation,the authors hope to contributeto
a deeper understandingof internationalcooperation.

II. PAYOFF STRUCTURE:

MUTUAL AND CONFLICTING PREFERENCES

The structureof payoffsin a given round of play-the benefitsof

mutual cooperation (CC) relative to mutual defection (DD) and the
benefitsof unilateraldefection(DC) relativeto unrequited cooperation
(CD)-is fundamental to the analysis of cooperation. The argument

9Ibid., I39-4I-
10See Martin Shubik, Gamesfor Society,Businessand War: TowardsA Theoryof Gaming
(New York: Elsevier, I975). For a formalstatementon the importanceof the number of
playersto cooperationin iteratedgames, see Fudenberg and Maskin (fn. 7).
11See Robert0. Keohane, AfterHegemony:Cooperationand Discordin the WorldPolitical
Economy(Princeton:PrincetonUniversityPress, i984), and Krasner (fn. 5).
See JohnA. C. Conybeare,"InternationalOrganization and the Theory of Property
12

Rights,"International
Organization34 (Summer i980), 307-34, and Kenneth A. Oye, "Belief
Systems,Bargaining,and Breakdown: InternationalPolitical Economy I929-I936," Ph.D.
diss. (Harvard University,i983), chap. 3.
 EXPLAINING COOPERATION UNDER ANARCHY 5

proceedsin threestages.First,how does payoffstructure affectthe

significance
ofcooperation? Morenarrowly, whenis cooperation, defined
in termsof consciouspolicycoordination, necessaryto the realization
of mutualinterests? Second,how does payoffstructure affectthelike-
lihoodand robustness of cooperation?Third,throughwhat strategies
can statesincreasethe long-term prospectsforcooperationby altering
payoffstructures?
Beforeturningto thesequestions,considerbriefly sometangibleand
intangibledeterminants of payoffstructures. The securityand political
economyliteratures examinetheeffects of military forcestructure and
doctrine,economic ideology,the size of currencyreserves,macro-
economiccircumstance, and a hostof otherfactorson nationalassess-
mentsof nationalinterests.In "Cooperationunder the SecurityDi-
lemma,"RobertJervishas explainedhow the diffusionof offensive
militarytechnology and strategiescan increaserewardsfromdefection
and thereby reducetheprospects forcooperation. In "International Re-
gimes,Transactions, and Chance:EmbeddedLiberalismin thePostwar
EconomicOrder,"JohnRuggiehas demonstrated how thediffusion of
liberaleconomicideas increasedthe perceivedbenefits of mutualeco-
nomic opennessover mutual closure(CC-DD), and diminishedthe
perceivedrewardsfromasymmetric defectionrelativeto asymmetric
cooperation (DC-CD). In "Firms and Tariff RegimeChange,"Timothy
McKeownhas shownhowdownturns in thebusinesscyclealternational
tastesforprotection and thereby decreasetheperceivedbenefits of mu-
tual opennessrelativeto mutual closureand increasethe perceived
rewardsof asymmetric defection.'3
In thepresentsymposium, ideologicaland cognitivedeterminants of
nationalpreferences are emphasizedin StephenVan Evera's essayon
the originsof the First World War and KennethOye's chapteron
monetary conflictduringthe 1930s. RobertJervis's essayon theemer-
genceof concertfollowingsystemic warselucidatesinternational struc-
turaldeterminants of payoffs. JohnConybeare'scomparative studyof
tradewars,KennethOye's studyof monetary conflictin the 1930S, and
CharlesLipson'sstudyof bankers'dilemmasexaminemacroeconomic
determinants of payoffstructure. George Downs, David Rocke,and
RandolphSiversoninvestigate domesticstructural determinants of pay-
offstructure in theiressayon cooperation in armsraces.Payoffstructure

3 See Jervis(fn. 5); Ruggie (fn. 5); Timothy J. McKeown, "Firms and Tariff Regime
Change: Explaining the Demand forProtection,"WorldPolitics36 (January1984), 215-33.
On the effectsofambiguityof preferences on the prospectsof cooperation,see the concluding
sectionsof Jervis(fn. 5).
6 WORLD POLITICS
serves as an interveningvariable between cognitive,domestic,and in-
ternationalstructuralfactorsand internationalcooperation.

A. PAYOFF STRUCTURE AND COOPERATION

How does payoffstructuredeterminethe significanceof cooperation?

More narrowly,when is cooperation,definedin termsof conscious policy
coordination,necessaryto the realizationof mutualbenefits? For a mutual
benefitto exist,actors must prefermutual cooperation (CC) to mutual
defection(DD). For coordinationto be necessaryto the realizationof the
mutual benefit,actors must preferunilateral defection(DC) to unre-
quited cooperation(CD). These preferenceorderingsare consistentwith
the familiar games of Prisoners' Dilemma, Stag Hunt, and Chicken.
Indeed, these games have attracteda disproportionateshare of scholarly
attentionpreciselybecause cooperation is desirable but not automatic.
In these cases, the capacityof statesto cooperateunder anarchy,to bind
themselvesto mutuallybeneficialcoursesof action withoutresortto any
ultimatecentralauthority,is vital to the realizationof a common good.
Many internationalsituationsdo not fall within this class of games.
First, consider cases in which cooperation will not be necessaryto the
realization of mutual interests.If actors preferunrequited cooperation
(CD) to unilateral defection (DC), no incentive to cheat exists. The
pursuit of self-interest,without regard to the action of others, will
automaticallylead to mutual gains. For example, pure economic liber-
als-more common on economics facultiesthan in trade ministries-
believe that unrequited openness is preferableto unilateral protection.
Irrespectiveof the actions of others,a liberal believes that openness is
best.In a world of pure liberals,policycoordinationwill not be necessary
to the realization of openness. In such situations,where interestsare in
full harmony,the capacity of states to cooperate under anarchy is ir-
relevantto the realization of mutual benefits.'4
Second, consider cases where no mutual benefit can be realized
through cooperation. If at least one actor prefersnominal mutual de-
fection(DD) to nominal mutual cooperation(CC), "policycoordination"
cannotlead to mutual gain; theterm"cooperation"becomesinapplicable.
Symmetricand asymmetricgames of Deadlock fall into this category.
For example, if both the Soviet Union and theUnited Statespreferarms
racingto arms control,conflictis inevitable.Or considera tradeexample:
a believer in autarkywill prefermutual protectionto mutual openness.
To speak of cooperationbetweena pure liberaland a believerin autarky
I4For an extended discussion of the distinctionbetween cooperationand harmony,see
Keohane (fn. II), 5I-55.
 EXPLAINING COOPERATION UNDER ANARCHY 7

is nonsense. Where harmonyprevails,cooperationis unnecessaryto the

realization of mutual interests.Where deadlocks exist, the term "co-
operation" is devoid of meaning, and conflictis inevitable. Neither
harmony nor deadlock has attractedsubstantialattentionfrom game
theorists-preciselybecause cooperativeand conflictualoutcomesfollow
so directlyand simplyfromthe payoffstructure.
What functiondo games of Harmony and Deadlock serve in this
collection?In courses on diagnosis,medical studentsare taught,"When
you hear hoofbeats,thinkhorsebeforeyou thinkzebra." Harrison Wag-
ner has offeredsimilaradvice to analystsof internationalrelations.15
He
warned that Stag Hunt, Chicken, and Prisoners' Dilemma are often
inappropriatemodels of internationalsituations.When you observecon-
flict,thinkDeadlock-the absence of mutual interest-before puzzling
over why a mutual interestwas not realized. When you observe co-
operation,thinkHarmony-the absence ofgains fromdefection-before
puzzling over how states were able to transcend the temptationsof
defection.By devotingsubstantialattentionto the specificationof payoff
structures,the contributorsseek to heed these warnings.
In the class of games-including Prisoners'Dilemma, Stag Hunt, and
Chicken-where cooperation is necessaryto the realization of mutual
benefits,how does payoffstructureaffectthe likelihood and robustness
of cooperation in these situations? Cooperation will be less likely in
Prisoners'Dilemma than in Stag Hunt or Chicken. To understandwhy,
consider each of these games in conjunctionwith the illustrativestories
fromwhich theyderive theirnames.
Prisoners'Dilemma: Two prisonersare suspected of a major crime.
The authoritiespossess evidence to secure convictionon only a minor
charge. If neitherprisonersqueals, both will draw a light sentence on
the minor charge (CC). If one prisonersqueals and the otherstonewalls,
the rat will go free(DC) and the suckerwill draw a veryheavy sentence
(CD). If both squeal, both will draw a moderate sentence (DD). Each
prisoner'spreferenceorderingis: DC > CC > DD > CD. If theprisoners
expectto "play" onlyone time,each prisonerwill be betteroffsquealing
than stonewalling,no matterwhat his partnerchooses to do (DC > CC
and DD > CD). The temptationof the rat payoffand fearof the sucker
payoffwill drive single-playPrisoners' Dilemmas toward mutual de-
fection.Unfortunately,if both prisonersact on this reasoning,theywill
draw a moderate sentenceon the major charge,while cooperationcould
have led to a lightsentenceon the minor charge (CC > DD). In single-
I5Wagner, "The Theory of Games and the Problem of InternationalCooperation,"
AmericanPoliticalScience Review 70 (June i983), 330-46.
8 WORLD POLITICS

play Prisoners' Dilemmas, individuallyrational actions produce a col-

lectivelysuboptimal outcome.
Stag Hunt: A group of hunterssurround a stag. If all cooperate to
trap the stag, all will eat well (CC). If one person defectsto chase a
passing rabbit,the stag will escape. The defectorwill eat lightly(DC)
and none of the others will eat at all (CD). If all chase rabbits,all will
have some chance of catching a rabbit and eating lightly(DD). Each
hunter'spreferenceorderingis: CC > DC > DD > CD. The mutual
interestin plentifulvenison (CC) relativeto all otheroutcomes militates
stronglyagainst defection.However, because a rabbitin the hand (DC)
is betterthan a stag in the bush (CD), cooperationwill be assured only
if each hunter believes that all hunters will cooperate. In single-play
Stag Hunt, the temptationto defectto protectagainst the defectionof
othersis balanced bythestronguniversalpreferenceforstagover rabbit.'6
Chicken:Two driversrace down the centerof a road fromopposite
directions.If one swerves and the other does not, then the firstwill
sufferthe stigma of being known as a chicken (CD) while the second
will enjoy being known as a hero (DC). If neitherswerves,both will
suffergrievouslyin the ensuing collision (DD). If both swerve,damage
to the reputationof each will be limited (CC). Each driver'spreference
orderingis: DC > CC > CD > DD. If each believesthatthe otherwill
swerve, then each will be tempted to defect by continuingdown the
centerof the road. Betterto be a live hero than a live chicken. If both
succumb to this temptation,however,defectionwill resultin collision.
The fear that the other driver may not swerve decreases the appeal of
continuing down the center of the road. In single-playChicken, the
temptationsof unilateral defectionare balanced by fear of mutual de-
fection.17
In games that are not repeated, only ordinally defined preferences
matter.Under single-playconditions,interval-levelpayoffsin ordinally
defined categoriesof games cannot (in theory)affectthe likelihood of
cooperation.In the illustrationsabove, discussionsof dominantstrategies

i6
KennethWaltz borrowedRousseau's parableof thestaghuntto illustratetheinfeasibility
of realizing mutual interestsunder internationalanarchy.Rousseau used the staghuntto
illustratethe possibilityof cooperationduring his firstperiod of primativesocial interde-
pendence. He argued thatindividualscould cooperateon "mutual undertakings"to realize
"presentand perceptibleinterest"through"some kind of freeassociationthatobligatedno
one and lasted only so long as the passing need that formedit." This essay returnsto
Rousseau's use of the staghunt.See Waltz, Man, theState,and War (New York: Columbia
UniversityPress, 1959), and JeanJacquesRousseau: The Firstand SecondDiscourses,trans.
Roger D. and JudithR. Masters(New York: St. Martins,i964), 165-67.
I The illustrativepreferenceorderingsstrike most mature observersas perverse:the
driversneed not place themselvesin the game.
 EXPLAINING COOPERATION UNDER ANARCHY 9

do not hingeon the magnitudeof differences amongthe payoffs. Yet

the magnitudeof differences betweenCC and DD and betweenDC
and CD can be large or small,if not preciselymeasurable,and can
increaseor decrease.Changes in the magnitudeof differences in the
value placed on outcomescan influencethe prospectsforcooperation
throughtwo paths.
First,changesin the value attachedto outcomescan transform sit-
uationsfromone ordinallydefinedclass of game into another.For
example,in "Cooperationunderthe SecurityDilemma" RobertJervis
describedhow difficult Prisoners'Dilemmasmayevolveintoless chal-
lengingStag Huntsifthegainsfrommutualcooperation (CC) increase
relativeto thegainsfromexploitation (DC). He relatedthestructure of
payoffsto traditionalconcepts of offensive and defensive dominance,
and offensive and defensivedominanceto technological and doctrinal
ErnstHaas, MaryPat Williams,and Don Babai haveemphasized
shifts.
theimportance congruence
ofcognitive as a determinant oftechnological
cooperation. The diffusionof common conceptions of the natureand
effectsof technology enhancedperceivedgains fromcooperationand
diminishedperceivedgainsfromdefection, and mayhave transformed
somePrisoners'DilemmasintoHarmony.'8
Second, under iteratedconditions,the magnitudeof differences
amongpayoffs withina givenclass of gamescan be an important de-
terminant The moresubstantial
of cooperation. thegainsfrommutual
cooperation(CC-DD) and theless substantial thegainsfromunilateral
defection(DC-CD), thegreaterthelikelihoodofcooperation. In iterated
situations,the magnitude of the difference between CC and DD and
betweenDC and CD in presentand futureroundsof playaffectsthe
likelihoodofcooperation in thepresent.This pointis developedat length
in thesectionon theshadowof thefuture.
B. STRATEGIES TO ALTER PAYOFF STRUCTURE

If payoffstructureaffects towhatextent
thelikelihoodofcooperation,
can statesaltersituationsby modifying and thereby
payoffstructures,
increasethelong-term likelihoodof cooperation?Manyof thetangible
and intangibledeterminants discussedat theoutset
of payoffstructure,
of thissection,are subjectto willfulmodification throughunilateral,
and multilateral
bilateral, In "CooperationundertheSecurity
strategies.
Dilemma," RobertJervishas offeredspecificsuggestionsforaltering
payoffstructures Procurement
throughunilateralstrategies. policycan
and WorldOrder:The Usesof TechnicalKnowledge
i8 Haas, Williams, and Babai, Scientists

in InternationalOrganizations(Berkeley:Universityof CaliforniaPress, I977).

10 WORLD POLITICS
affectthe prospectsforcooperation. If one superpowerfavorsprocure-
mentof defensiveoveroffensive weapons,it can reduceitsown gains
fromexploitation through surpriseattack(DC) and reduceitsadversary's
fearof exploitation (CD). Membersof allianceshave oftenresortedto
the device of deployingtroopson troubledfrontiers to increasethe
likelihoodofcooperation. A state'suse of troopsas hostagesis designed
to diminishthepayoff fromitsown defection-toreduceitsgainsfrom
exploitation(DC)-and thereby renderdefensive defection byitspartner
lesslikely.Publicizingan agreement diminishes payoffs associatedwith
defectionfromthe agreement, and therebylessensgains fromexploi-
tation.These observations in international relationsare paralleledby
recentdevelopments in microeconomics. OliverWilliamsonhas iden-
tifiedunilateraland bilateraltechniquesusedbyfirmsto facilitate inter-
firmcooperationby diminishinggains fromexploitation. He distin-
guishesbetweenspecificand nonspecific costsassociatedwithadherence
to agreements.Specificcosts,suchas specializedtraining, machinetools,
and construction, cannotbe recoveredin the eventof the breakdown
ofan agreement. Whenpartiestoan agreement incurhighspecific costs,
repudiation ofcommitments willentailsubstantial losses.Firmscan thus
reducetheirgainsfromexploitation throughthetechniqueofacquiring
dedicatedassetsthatserveas hostagesto continuing cooperation.Non-
specificassets,such as general-purpose trucksand airplanes,are sal-
vageableifagreements breakdown;firmscan reducetheirfearofbeing
exploitedby maximizingthe use of nonspecific assets,but such assets
cannotdiminishgains fromexploitation by servingas hostages.'9 Uni-
lateral strategiescan improve the prospectsof cooperationby reducing
both the costs of being exploited (CD) and the gains fromexploitation
(DC). The new literatureon interfirmcooperationindirectlyraises an
old question on the costs of unilateralstrategiesto promotecooperation
in internationalrelations.
In many instances,unilateral actions that limit one's gains from ex-
ploitation may have the effectof increasingone's vulnerabilityto ex-
ploitationby others.For example,a statecould limitgains fromdefection
fromliberal internationaleconomic norms by permittingthe expansion
of sectors of comparative advantage and by permittingliquidation of
inefficientsectors.Because a specialized economy is a hostage to inter-
national economic cooperation,this strategywould unquestionablyin-
crease the credibilityof the nation's commitmentto liberalism.It also

I9Williamson(fn.5).
 EXPLAINING COOPERATION UNDER ANARCHY 11

has theeffect, however,of increasingthenation'svulnerability to pro-

tectionbyothers.In thetroops-as-hostage example,thegovernment that
stationstroopsmay promotecooperationby diminishing an ally'sfear
of abandonment, but in so doingit raisesitsown fearsof exploitation
by theally.In an examplefromtheneoconservative nuclearliterature,
Paul Nitze, Colin Gray, William Van Cleave,and others assumethat
missileswill be firedagainstmissilesratherthanagainstindustries or
cities,and concludethata shiftfromcounterforce towardcountervalue
weaponsmay purchasea reductionin gains fromexploitation at the
expenseof heightened vulnerability Cognitive,domes-
to exploitation.2o
tic,and international structural factorsaffectpayoffstructure directly,
and also influenceperceptions of the benefitsand limitsof unilateral
strategiesto alterpayoffs.
Unilateralstrategies do not exhaustthe rangeof optionsthatstates
mayuse toalterpayoff structures.Bilateralstrategies-most significantly
strategiesof issue linkage-can be used to alterpayoffstructures by
combiningdissimilargames. Because resortto issue linkagegenerally
assumesiteration,analysisof how issue linkagecan be used to alter
payoffsis presentedin the sectionon the shadowof the future.Fur-
thermore, bilateral"instructional" strategiescan aim at alteringanother
country's understanding of cause-and-effect relationships,and resultin
alteredperceptions of interest.For example,Americannegotiators in
SALT I soughtto instructtheirSovietcounterparts on the logic of
mutual assured destruction.21
Multilateral strategies,centeringon the formationof international
regimes,can be used to alter payoffstructuresin two ways. First,norms
generated by regimes may be internalizedby states,and therebyalter
payoffstructure.Second, informationgenerated by regimes may alter
states' understanding of their interests.As Ernst Haas argues, new
regimes may gather and distribute informationthat can highlight
cause-and-effectrelationships not previously understood. Changing
perceptionsof means-ends hierarchiescan, in turn,result in changing
perceptions of interest.22

20 See Paul Nitze, "AssuringStrategicStabilityin an Era of Detente," ForeignAffairs54

(JanuaryI976), 207-32, for the seminal article in this tradition.Nitze's recommendations
hinge on acceptance of the preceptsof what has come to be known as nuclear utilization
theory.Jervis'srecommendationsdepend on acceptanceof the preceptsof mutual assured
destruction(fn. 5).
21 See JohnNewhouse, Cold Dawn: The Storyof SALT I (New York: Holt, Rinehart&
Winston, I973).
22 See Haas, "Words Can Hurt You; Or Who Said What to Whom About Regimes," in

Krasner (fn. 5).

12 WORLD POLITICS

III. THE SHADOW OF THE FUTURE:

SINGLE-PLAY AND ITERATED GAMES

The distinction betweencases in whichsimilartransactions among

partiesare unlikelyto be repeatedand cases in whichtheexpectation
offutureinteraction caninfluence decisionsinthepresent is fundamental
to theemergenceofcooperation amongegotists. As theprevioussection
suggests,statesconfronting strategic situations
thatresemblesingle-play
Prisoners'Dilemma and, to a lesserextent,single-play Stag Hunt and
Chicken,are constantly temptedby immediategains fromunilateral
defection,and fearful ofimmediatelossesfromunrequitedcooperation.
How does continuing interaction affectprospects forcooperation? The
argumentproceedsin fourstages.First,why do iteratedconditions
improvetheprospectsforcooperationin Prisoners'Dilemmaand Stag
Hunt whilediminishing theprospects forcooperation in Chicken?Sec-
ond, how do strategiesof reciprocity improvethe prospectsfor co-
operationunderiteratedconditions?Third,whydoes theeffectiveness
of reciprocityhingeon conditionsof play-the abilityof actorsto dis-
tinguishreliablybetweencooperationand defectionby othersand to
respondin kind? Fourth,throughwhat strategies can statesimprove
conditionsof playand lengthentheshadowof thefuture?23
Beforeturningto thesequestions,considertheattributes of iterated
situations.
First,statesmustexpectto continuedealingwitheach other.
This conditionis, in practice,
notparticularly Withthepos-
restrictive.
sible exceptionof global thermonuclear war, international politicsis
characterizedby the expectatonof futureinteraction. Second,payoff
structuresmustnotchangesubstantially overtime.In otherwords,each
roundof playshouldnotalterthestructure of thegame in thefuture.
This conditionis, in practice,
quiterestrictive. For example,statescon-
sideringsurprise attackwhen offense is dominantare in a situationthat
hasmanyofthecharacteristics ofa single-play game:attackaltersoptions
and payoffs in futureroundsof interaction. Conversely, nationsconsid-
eringincreasesor decreasesin theirmilitary budgetsare in a situation
thathasmanyofthecharacteristics ofan iteratedgame:spendingoptions
and associatedmarginalincreasesor decreasesin military strength are
likelyto remainfairlystableover futureroundsof interaction. In in-
ternationalmonetaryaffairs,governments consideringor fearingde-
valuationunder a gold-exchangestandardare in a situationthathas
manyof the characteristics of a single-play game: devaluationmaydi-
minishthe value of anotherstate'sforeigncurrency reserveson a one-
23 This sectionis derived largelyfromAxelrod (fn. 7), and Telsor (fn. 6).
 EXPLAINING COOPERATION UNDER ANARCHY 13

time basis, while reductionsin holdingsof reserveswould diminish

possiblelosseson a one-timebasis.Conversely, governments considering
intervention under a floatingsystemwith minimalreservesare in a
situationthathas manyof the characteristics of an iteratedgame: de-
preciationor appreciation of a currencywould not producesubstantial
one-timelossesor gains.Third,thesize of thediscountrateappliedto
thefutureaffects theiterativeness ofgames.If a government placeslittle
value on futurepayoffs, itssituationhas manyof thecharacteristics of
a single-playgame.If itplacesa highvalueon future payoffs,
itssituation
mayhavemanyof thecharacteristics ofan iteratedgame.For example,
politicalleadersin theirfinaltermare likelytodiscountthefuturemore
substantiallythanpoliticalleadersrunningfor,or certainof,reelection.
A. THE SHADOW OF THE FUTURE AND COOPERATION

How does the shadowof the futureaffectthelikelihoodof cooper-

ation?Under single-play conditionswithouta sovereign, adherenceto
agreementsis oftenirrational.Considerthe single-play Prisoners'Di-
lemma.Each prisoneris betteroffsquealing,whetheror nothispartner
decidesto squeal. In the absenceof continuinginteraction, defection
would emergeas thedominantstrategy. Because the prisonerscan nei-
therturnto a centralauthority forenforcement of an agreementto
cooperatenor relyon the anticipationof retaliationto deterpresent
cooperationwill be unlikelyundersingle-play
defection, conditions.If
theprisonersexpectto be placedin similarsituations in thefuture,the
prospectsforcooperationimprove.Experimental evidencesuggeststhat
underiteratedPrisoners'Dilemma the incidenceof cooperationrises
Even in theabsenceof centralizedauthority,
substantially.24 tacitagree-
mentsto cooperatethroughmutualstonewalling are frequently reached
and maintained.UnderiteratedPrisoners' a
Dilemma, potential defector
comparestheimmediategain fromsquealingwiththepossiblesacrifice
of futuregains thatmay resultfromsquealing.25 In single-playStag
24 See Anatol Rapoportand AlbertChammah,Prisoner's Dilemma (Ann Arbor:University
of Michigan Press, i965), and subsequentessaysin Journalof ConflictResolution.
25 One commonobjectionto thisline ofargumentcenterson theirrationality ofcooperation
if a sequence of Prisoners'Dilemmas has a known last element.On the known last play,
the immediategain fromsquealing cannot be offsetby expectationsof futurecooperation.
On the next-to-lastplay, the immediategain fromsquealing is not offsetby expectations
of futurecooperation,since bothactorsknow thatcooperationis irrationalon the last move.
And so on back toward the initialmove. This line of analysiscollapses iteratedPrisoners'
Dilemma into single-playPrisoners'Dilemma. To analystsof internationalrelations,the
importanceof this objection is limited.In internationalrelations,no experimenterdecrees
thata series of Prisoners'Dilemmas shall end on the ioth move or at noon. Althoughany
series of transactionswill terminatesooner or later,governmentsdo not generallyknow
when the last play will occur. On all rounds of play, the actors' decisionsare conditioned
14 WORLD POLITICS

Hunt, each hunteris temptedto defectin orderto defendhimselfagainst

the possibilityof defectionby others. A reputationfor reliability,for
resistingtemptation,reduces the likelihood of defection.If the hunters
are a permanentgroup,and expectto hunttogetheragain, the immediate
gains fromunilateraldefectionrelativeto unrequited cooperationmust
be balanced against the cost of diminishedcooperationin the future.In
both Prisoners' Dilemma and Stag Hunt, defection in the present
decreasesthe likelihood of cooperationin the future.In both, therefore,
iterationimprovesthe prospectsforcooperation.26In Chicken, iteration
may decrease theprospectsforcooperation.Under single-playconditions,
the temptationof unilateral defection is balanced by the fear of the
collision that follows frommutual defection.How does iterationaffect
then each drivermay
this balance? If the game is repeated indefinitely,
refrainfrom swerving in the present to coerce the other driver into
swerving in the future.Each driver may seek to acquire a reputation
fornot swervingto cause the otherdriverto swerve.In iteratedChicken,
one driver'sdefectionin the presentmay decrease the likelihood of the
other driver's defectionin the future.27

B. STRATEGIES OF RECIPROCITY AND CONDITIONS OF PLAY

It is at this juncture that strategyenters the explanation. Although

the expectation of continuing interactionhas varying effectson the
likelihood of cooperationin the illustrationsabove, an iteratedenviron-
ment permits resort to strategiesof reciprocitythat may improve the
prospectsof cooperation in Chicken as well as in Prisoners' Dilemma
and Stag Hunt. RobertAxelrod argues thatstrategiesof reciprocityhave
the effectof promotingcooperationby establishinga direct connection
between an actor's presentbehaviorand anticipatedfuturebenefits.Tit-
for-Tat,or conditional cooperation,can increase the likelihood of joint
cooperation by shaping the futureconsequences of presentcooperation
or defection.

by the possibilityof futureinteraction.For a formalanalysisof how uncertaintimehorizons

can lead to a resolutionof the Prisoners'Dilemma, see Luce and Raiffa(fn. 6), Appendix
8. Discount parameterssuch as Axelrod's"w" maycapturetheeffectsof uncertainty. Possible
futurepayoffsmay be discountedboth because the value placed on futurebenefitsis lower
than presentbenefitsand because the streamof futurebenefitsmay be interruptedif the
structureof the game changes.
This conclusion restson the assumptionthat dyadic interactionsare moderatelyin-
26

dependent.For an argumenton how defectioncan providea benefit(externalto a dyadic

interaction)by discouragingthe entryof other actors,see Shibley Telhami, "Cooperation
or Coercion: Tit for Tat and the Realities of InternationalPolitics,"unpub. (Swarthmore
College, Januaryi985). Note also thatcooperationcan also encourage (mutuallybeneficial)
entryof otheractors.
On iteratedChicken, see Snyderand Diesing (fn. 4), 43-44.
27
 EXPLAINING COOPERATION UNDER ANARCHY 15

In iterated Prisoners' Dilemma and Stag Hunt, reciprocityunder-

scoresthe futureconsequences of presentcooperationand defection.The
argument presented above-that iterationenhances the prospects for
cooperationin these games-rests on the assumption that defectionin
the present will decrease the likelihood of cooperation in the future.
Adoption of an implicit or explicit strategyof matching stonewalling
with stonewalling,squealing with squealing, rabbitchasing with rabbit
chasing,and cooperativehuntingwith cooperativehuntingvalidates the
assumption. In iteratedChicken, a strategyof reciprocitycan offsetthe
perverseeffectsof reputationalconsiderationson the prospectsfor co-
operation.Recall that in iteratedChicken, each drivermay refrainfrom
swervingin the presentto coerce the other driverinto swervingin the
future. Adoption of an implicit or explicit strategyof Tit-for-Tat in
iteratedgames of Chicken altersthe futurestreamof benefitsassociated
with presentdefection.If a strategyof reciprocityis credible,then the
mutual losses associated with futurecollisions can encourage present
swerving.In all threegames, a promiseto respondto presentcooperation
with future cooperation and a threat to respond to present defection
with futuredefectioncan improve the prospectsfor cooperation.
The effectivenessof strategiesof reciprocityhinges on conditionsof
play-the ability of actors to distinguishreliablybetween cooperation
and defection by others and to respond in kind. In the illustrations
provided above, the meaning of "defect" and "cooperate" is unambig-
uous. Dichotomous choices-between squeal and stonewall, chase the
rabbitor capture the stag,continuedown the road or swerve-limit the
likelihood of misperception.Further,the actions of all are transparent.
Given the definitionsof the situations,prisoners,hunters,and drivers
can reliably detect defectionand cooperation by other actors. Finally,
the definitionof the actorseliminatesthe possibilityof controlproblems.
Unitary prisoners,hunters,and drivers do not sufferfrom factional,
organizational, or bureaucraticdysfunctionsthat might hinder imple-
mentationof strategiesof reciprocity.
In internationalrelations,conditionsof play can limitthe effectiveness
of reciprocity.The definitionof cooperationand defectionmay be am-
biguous. For example, the Soviet Union and the United States hold to
markedlydifferentdefinitionsof "defection"fromthe termsof detente
as presented in the Basic Principles Agreement;28the European Com-
munity and the United States differover whether domestic sectoral
policies comprise indirectexportsubsidies. Further,actions may not be
28
See Alexander L. George, Managing U.S.-SovietRivalry:Problemsof CrisisPrevention
(Boulder, CO: Westview, i983).
16 WORLD POLITICS

transparent. For example,governments maynot be able to detectone

another'sviolationsof armscontrolagreements or indirectexportsub-
sidies. If defectioncannotbe reliablydetected,the effectof present
cooperation on possiblefuturereprisals willerode.Together,ambiguous
definitions and a lack of transparency can limittheabilityof statesto
recognizecooperationand defection byothers.
Becausereciprocity controlis as important
requiresflexibility, as rec-
ognition.Internalfactional,organizational, and bureaucratic dysfunc-
tionsmaylimittheabilityofnationstoimplement Tit-for-Tat strategies.
It maybe easierto sellone unvarying lineofpolicythantosella strategy
of shifting betweenlinesof policyin responseto theactionsof others.
For example,arms suppliersand defenseplannerstend to resistthe
cancellation of weaponssystems evenifthecancellation is a responseto
the actionsof a rival.Import-competing industriestend to resistthe
removalofbarriersto imports, eveniftradeliberalization is in response
to liberalizationby anotherstate.At times,nationaldecisionmakers
maybe unableto implement strategiesofreciprocity.On otheroccasions,
theymustinvestheavilyin sellingreciprocity. For thesereasons,national
decisonmakersmay displaya bias againstconditionalstrategies:the
domesticcostsof pursuingsuchstrategies maypartially offset thevalue
of thediscountedstreamof futurebenefits thatconditionalpoliciesare
expectedto yield.
As RobertAxelrodnotes,problemsof recognition and controlmay
limiteffective resortto reciprocity.In thissymposium, such problems
are examinedin severalways. The essay on "Arms Races and Co-
operation"presents a simplesimulation designedtoassessthesensitivity
of Tit-for-Tatstrategiesto departuresfromperfectrecognition and
control.The case studiesand theconclusionassesstheextentto which
problemsof recognition and controlare, in practice,impediments to
effective utilizationof strategies
of reciprocity.29
C. STRATEGIES TO IMPROVE RECOGNITION AND LENGTHEN THE SHADOW
OF THE FUTURE

To what extentcan governments promotecooperationby creating

favorableconditionsof play and by lengthening the shadow of the
future?The literature regimesoffers
on international severaltechniques
of norms
of play.Explicitcodification
forcreatingfavorableconditions

29 Axelrod shows thatin iteratedPrisoners'Dilemma, whereactorscan reliablydistinguish

between cooperationand defectionby othersand respond in kind, Tit-for-Tatperforms
betterthan do alternativestrategies.When recognitionand control are perfect,iterated
environmentsstronglyfavorthe emergenceof cooperation.
 EXPLAINING COOPERATION UNDER ANARCHY 17

can limitdefinitionalambiguity. The veryactofclarifying standardsof

conduct,ofdefining cooperative and uncooperative behavior, can permit
moreeffective resortto strategies of reciprocity.Further,provisions for
surveillance-forexample,mechanisms forverification in armscontrol
agreementsor for sharinginformation on the natureand effectsof
domesticsectoralpolicies-can increasetransparency. In practice,the
goal ofenhancingrecognition is oftencentralto negotiations
capabilities
underanarchy.
The game-theoretic and institutional microeconomic literatures offer
severalapproachesto increasingthe iterativecharacterof situations.
Thomas Schellingand RobertAxelrodsuggesttacticsof decomposition
over time to lengthenthe shadow of the future.30 For example,the
temptation to defectin a deal promising thirty billiondollarsfora billion
barrelsof oil may be reducedif the deal is slicedup intoa seriesof
payments and deliveries.Cooperationin armsreduction or in territorial
disengagement maybe difficult ifthereduction or disengagement must
be achievedin one jump.If a reduction or disengagement can be sliced
up intoincrements, theproblemof cooperation maybe renderedmore
Finally,strategies
tractable. of issuelinkagecan be used to alterpayoff
structuresand to interject elementsof iterativeness intosingle-play sit-
uations.Relationsamongstatesarerarelylimitedtoone single-play issue
ofoverriding importance. Whennationsconfront a single-play gameon
one issue,presentdefection maybe deterredbythreatsof retaliation on
otheriteratedissues.In international monetary affairs,forinstance,a
government fearingone-timereservelossesifanotherstatedevaluesits
currency maylinkdevaluationtoan iterated tradegame.Byestablishing
a directconnection betweenpresentbehaviorin a single-play gameand
futurebenefits in an iteratedgame,tacitor explicitcross-issue linkage
can lengthentheshadowof thefuture.3'
The shadowof thefuture, strategiesof reciprocity, and payoffstruc-
tureinteractin determining thelikelihoodofcooperation. Incentives to
cooperateand to defectare thediscountedstreamofanticipated payoffs
acrosscurrent and future encounters. The sizeofthediscountrateaffects
the value of futurebenefits. A Tit-for-Tatstrategy providesa clearer
view of how presentbehavioris likelyto affectan adversary's future
behavior,and therebysharpensdifferences betweenthe anticipated
3-Schelling (fn. 2), 43-46,and Axelrod (fn. 7), i26-32.
3'For analyses of issue linkage, see Robert D. Tollison and Thomas D. Willett, "An
Economic Theory of MutuallyAdvantageousIssue Linkages in InternationalNegotiations,"
Organization33 (Autumn I979) 425-49; Oye (fn. i2), chap. 3, "Bargaining:The
International
Logic of ContingentAction"; and Axelrod and Keohane in the concluding essay of this
symposium.
18 WORLD POLITICS

streamof payoffsforcooperationand defection.The structureof payoffs

in each round of play is the object of the discountingand anticipating.

IV. NUMBER OF PLAYERS:

Two-PERSON AND N-PERSON GAMES

Up to now, I have discussed the effectsof payoffstructureand the

shadow of the futureon the prospectsof cooperationin termsof two-
person situations.What happens to the prospectsforcooperationas the
number of significantactors rises? In this section, I explain why the
prospectsfor cooperation diminish as the number of players increases;
examine the functionof internationalregimesas a responseto the prob-
lems created by large numbers; and offer strategiesto improve the
prospectsfor cooperationby alteringsituationsto diminishthe number
of significantplayers.
The numbers problem is centralto many areas of the social sciences.
Mancur Olson's theoryof collectiveaction focuseson N-person versions
of Prisoners' Dilemma. The optimismof our earlier discussionsof co-
operationunder iteratedPrisoners'Dilemma gives way to the pessimism
of analyses of cooperationin the provisionof public goods. Applications
of Olsonian theoryto problems ranging fromcartelizationto the pro-
vision of public goods in alliances underscorethe significanceof "free-
riding" as an impediment to cooperation.32In internationalrelations,
the numbersproblem has been centralto two debates.The longstanding
controversyover thestabilityofbipolarversusmultipolarsystemsreduces
to a debate over the impact of the number of significantactors on
internationalconflict.33A more recentcontroversy, between proponents
of the theoryof hegemonic stabilityand advocates of internationalre-
gimes, reduces to a debate over the effectsof large numbers on the
robustnessof cooperation.34
See Mancur Olson, Jr.,The Logic of CollectiveAction:Public Goodsand the Theoryof
32

Groups (Cambridge: Harvard UniversityPress, i965), and Mancur Olson and Richard
Zeckhauser, "An Economic Theory of Alliances," Review of Economicsand Statistics48
(August1966), 266-79. For a recentelegant summaryand extensionof the large literature
on dilemmas of collectiveaction, see Russell Hardin, CollectiveAction (Baltimore: Johns
Hopkins UniversityPress, i982).
33See Kenneth N. Waltz, "The Stabilityof a Bipolar World," Daedalus 93 (Summer
i964), and Richard N. Rosecrance,"Bipolarity,Multipolarity, and the Future,"Journalof
ConflictResolution(September I966), 3 14-27.
34On hegemony,see Robert Gilpin, U.S. Power and theMultinationalCorporation (New
York: Basic Books, I975), 258-59. On duopoly,see TimothyMcKeown, "Hegemonic Stability
Theory and i9th-CenturyTariffLevels in Europe," InternationalOrganization37 (Winter
i983), 73-9I. On regimes and cooperation,see Keohane (fn. ii), and Krasner (fn. 5). On
two-persongames and N-person public-goodsproblems,see Charles Kindleberger,"Dom-
inance and Leadership in the InternationalEconomy: Exploitation,Public Goods, and Free
Rides," InternationalStudiesQuarterly25 (June i98i), 242-54.
 EXPLAINING COOPERATION UNDER ANARCHY 19

A. NUMBER OF PLAYERS AND COOPERATION

How do numbersaffectthelikelihoodof cooperation?There are at

leastthreeimportant channelsof influence.35First,cooperation requires
recognitionofopportunities fortheadvancement ofmutualinterests, as
wellas policycoordination oncetheseopportunities havebeenidentified.
As the numberof playersincreases,transactions and information costs
rise.In simpleterms,the complexity of N-personsituationsmilitates
againstidentification and realizationof commoninterests.Avoiding
nuclearwar duringthe Cuban missilecrisiscalled forcooperationby
theSovietUnionand theUnitedStates.The transaction and information
costsin thisparticularly harrowingcrisis,thoughsubstantial, did not
precludecooperation. Bycontrast, theproblemofidentifying significant
actors,defininginterests, and negotiating agreementsthatembodied
mutualinterests in theN-actorcaseof I9I4 was farmoredifficult. These
secondarycostsassociatedwithattainingcooperativeoutcomesin N-
actorcaseserodethedifference betweenCC and DD. Moresignificantly,
theintrinsic difficultyof anticipatingthebehaviorof otherplayersand
ofweighingthevalueofthefuturegoesup withthenumberofplayers.
The complexity ofsolvingN-persongames,evenin thepurelydeductive
sense,has stuntedthe developmentof formalwork on the problem.
This complexity is even greaterin real situations,
and operatesagainst
multilateralcooperation.
Second,as the numberof playersincreases,thelikelihoodof auton-
omous defectionand of recognition and controlproblemsincreases.
Cooperativebehaviorrestson calculations ofexpectedutility-merging
discountrates,payoffstructures, and anticipatedbehaviorofotherplay-
ers.Discountratesand approachesto calculation are likelyto varyacross
actors,and the prospectsformutualcooperationmay declineas the
numberof playersand the probableheterogeneity of actorsincreases.
The chancesof includinga statethatdiscountsthefutureheavily,that
is too weak (domestically) to detect,react,or implementa strategy of
reciprocity,thatcannotdistinguishreliablybetweencooperationand
defectionby otherstates,or thatdepartsfromevenminimalstandards
ofrationalityincreasewiththenumberofstatesin a game.For example,
manypessimistic analysesof the consequencesof nuclearproliferation
focuson how breakdownsofdeterrence maybecomemorelikelyas the
numberof countrieswithnuclearweaponsincreases.36
Third,as thenumberofplayersincreases, thefeasibility
ofsanctioning
defectorsdiminishes.Strategies becomemoredifficult
of reciprocity to
35See Keohane (fn. ii), chap. 6, forextensionsof these points.
36 See Lewis A. Dunn, Controlling theBomb (New Haven: Yale UniversityPress, i982).
20 WORLD POLITICS

implementwithout triggeringa collapse of cooperation.In two-person

games, Tit-for-Tatworks well because the costsof defectionare focused
on only one other party.If defectionimposes costs on all parties in an
N-person game, however,the power of strategiesof reciprocityis under-
mined. The infeasibilityof sanctioningdefectorscreates the possibility
of free-riding.What happens if we increasethe number of actorsin the
iterated Prisoners' Dilemma from 2 to 20? Confession by any one of
them could lead to the convictionof all on the major charge; therefore,
the threatto retaliateagainst defectionin the presentwith defectionin
the futurewill impose costson all prisoners,and could lead to wholesale
defectionin subsequent rounds. For example, under the I9I4 systemof
alliances, retaliationagainst one member of the alliance was the equiv-
alent of retaliationagainst all. In N-person games, a strategyof con-
ditional defectioncan have the effectof spreading,ratherthan contain-
ing, defection.

B. STRATEGIES OF INSTITUTIONALIZATION AND DECOMPOSITION

Given a large number of players,what strategiescan states use to

increasethe likelihood of cooperation?Regime creationcan increasethe
likelihoodof cooperationin N-persongames.37First,conventionsprovide
rules of thumb that can diminish transactionand informationcosts.
Second, collectiveenforcementmechanismsbothdecrease the likelihood
of autonomous defectionand permit selectivepunishmentof violators
of norms. These two functionsof internationalregimesdirectlyaddress
problems created by large numbersof players.For example, Japan and
the members of NATO professa mutual interestin limitingflows of
militarilyuseful goods and technologyto the Soviet Union. Obviously,
all suppliers of militarilyuseful goods and technologymust cooperate
to deny the Soviet Union access to such items. Although governments
differin theirassessmentof the militaryvalue of some goods and tech-
nologies, there is consensus on a ratherlengthylist of prohibiteditems.
By facilitatingagreementon the prohibitedlist,the CoordinatingCom-
mitteeof the Consultative Group of NATO (CoCom) provides a rela-
tively clear definitionof what exports would constitutedefection.By
definingthe scope of defection,the CoCom list forestallsthe necessity
of retaliationagainst nations that ship technologyor goods that do not
fall within the consensual definitionof defection.38 Generally,cooper-
37 In addition to providinga partial solutionto the problemsof large numbers,regimes

may affectthe order and intensityof actor preferencesas normsare internalized,and may
heightenthe iterativenessof situationsas interactionbecomes more frequent.
38 For a full analysis of intra-alliancecooperation on East-West trade, see Michael
Mastanduno, "Strategiesof Economic Containment:U.S. Trade Relationswith the Soviet
 EXPLAINING COOPERATION UNDER ANARCHY 21

ation is a prerequisiteof regimecreation.The creationof rules of thumb

and mechanisms of collective enforcementand the maintenance and
administrationof regimes can demand an extraordinarydegree of co-
operation. This problem may limit the range of situationssusceptible
to modificationthroughregimiststrategies.
What strategiescan reduce the number of significantplayers in a
game and therebyrendercooperationmore likely? When governments
are unable to cooperateon a global scale,theyoftenturnto discriminatory
strategiesto encourage bilateralor regional cooperation.Tactics of de-
compositionacross actors can, at times, improve the prospectsfor co-
operation. Both the possibilitiesand the limits of strategiesto reduce
the number of playersare evident in the discussionsthat follow. First,
reductionsin the number of actors can usually only be purchased at the
expense of the magnitude of gains from cooperation. The benefitsof
regional openness are smaller than the gains from global openness. A
bilateralclearingarrangementis less economicallyefficient than a multi-
lateralclearingarrangement.Strategiesto reduce the numberof players
in a game generally diminish the gains from cooperation while they
increasethe likelihoodand robustnessof cooperation.39 Second, strategies
to reduce the number of playersgenerallyimpose substantialcosts on
third parties. These externalitiesmay motivatethird parties to under-
mine the limited area of cooperationor may serve as an impetus for a
thirdpartyto enlarge the zone of cooperation.In the I930s, forexample,
wholesale resortto discriminatorytradingpolicies facilitatedcreationof
exclusive zones of commercialopenness. When confrontedby a shrink-
ing market share, Great Britain adopted a less liberal and more dis-
criminatorycommercial policy in order to secure preferentialaccess to
its empire and to undermine preferentialagreements between other
countries.As the American marketshare diminished,the United States
adopted a more liberal and more discriminatorycommercial policy to
increaseitsaccess to exportmarkets.It is not possible,however,to reduce
the number of players in all situations.For example, compare the ex-
ample of limited commercial openness with the example of a limited
strategicembargo.To reduce thenumberof actorsin a tradewar,market
access can simply be offeredto only one countryand withheld from
others.By contrast,defectionby only one suppliercan permitthe target

Union," WorldPolitics37 (Julyi985), 503-3I, and BeverlyCrawfordand StephanieLenway,

"Decision Modes and InternationalRegime Change: WesternCollaborationon East-West
Trade, WorldPolitics37 (April i985), 375-402.
39 For a pure libertarianargumenton privateexchange as an alternativeto public man-
agement,see Conybeare (fn. i2).
22 WORLD POLITICS

of a strategicembargo to obtain a criticaltechnology.These problems

may limit the range of situationssusceptibleto modificationthrough
strategiesthat reduce the number of playersin games.

IV. CONCLUSION
As I noted at the outset, the analytic approach presented in this
symposium constitutesan implicit attack on the traditionalboundary
betweenstudiesof internationalpoliticaleconomyand studiesof security.
The emphasis on cooperation,the reliance on the three circumstantial
dimensions,and theanalysisofassociatedstrategiesto altercircumstances
are not specificto eithersecurityaffairsor politicaleconomy.This essay
and Duncan Snidal's complementaryintroduction,"The Game Theory
of International Politics," define and operationalize the three sets of
abstractexplanatoryand prescriptivepropositions,and discuss the uses
and abuses of game theoryin theempiricalstudyof internationalpolitics.
The six empirical essays in the main body of this collection provide a
limitedtrialof thesepropositionsbyprobingdiversesituations,strategies,
and outcomes in both securityand economic affairs.40
In the firstof the three case studies in securityaffairs,Robert Jervis
explains the incidence,scope, and durationof great-powerconcerts.He
begins by noting that counterhegemonicwar appears to be a necessary
condition for the emergenceof concert,and then offersan explanation
of why the Concert of Europe lasted from i8I5 to i854, but attempts
at concertfollowingWorld Wars I and II collapsed. His analysisstresses
the effects of an international structural cause-counterhegemonic
war-and of concertitselfon the preconditionsfor cooperation.
Stephen Van Evera explains the collapse of a fragilepeace in I9I4.
His analysis stressesthe effectsof a familyof ideas-militarism, na-
tionalism,and social imperialism-on the governingelites' perceptions
of theirinterestsand of each other.Van Evera suggeststhat these ideas
underminedeach of the threesituationalpreconditionsforcooperation,
and are necessaryto the explanationof the outbreakof the First World
War.
George Downs, David Rocke, and Randolph Siversontranscendsome
of the superficialcontroversiesover strategythatdivide analystsof arms
control.Their essay identifiesconditionsthatdeterminewhen unilateral

4 See AlexanderGeorge and RichardSmoke,Deterrencein AmericanForeignPolicy(New

York: Columbia UniversityPress, I974) fora seminalexample of how an austeretheoretical
frameworkand detailed historicalcases can promote both development of theoryand
historicalunderstanding.
 EXPLAINING COOPERATION UNDER ANARCHY 23

action, tacitbargaining,and explicitnegotiationare likelyto reduce the

intensityof arms races. Their analysis of i9th- and 20th-centuryarms
races thatdid not terminatein war stressesthe effectsof payoffstructure
and of problems of recognitionand control on the efficacyof arms-
control strategies.
In the firstof the case studies in political economy,JohnConybeare
examines factorsthatmay promoteand inhibitcommercialcooperation.
He explains why cooperation was not robust during the perpetual it-
erationsof the Anglo-Hanse conflict,how asymmetriesof power initially
impeded cooperation in the late i9th-centuryFranco-Italian case, and
how the "publicness" of the Hawley-Smoot tariffimpeded cooperation
during the I930s.
Between I930 and I936, internationalmonetaryrelationswere marked
by the collapse of fixedexchange rates and resortto competitivedeval-
uation,the emergenceof bilateraland regionalcooperation,and limited
monetarycoordination under the Tripartite Stabilization Agreement.
Kenneth Oye considerscircumstantialand strategicdeterminantsof the
incidence and scope of monetarycooperationin the I930s.
In timesof financialcrisis,individualcreditorscan derivebenefitfrom
limitingtheirexposureto protectthemselvesagainstdefault.But ifmany
creditorslimit their exposure, default is assured. In his essay, Charles
Lipson notes that contemporarydebt rescheduling requires the co-
operation of literallyhundreds of creditors,and explains how private
sanctionsand institutionalsettingshave fosteredcooperation(to date).
By juxtaposing a generic analytic frameworkand two sets of cases
organized along traditionalsubdisciplinaryboundaries,the contributors
to thiscollectionencourage speculationalong severallines. First,to what
extentdo cases in securityaffairsand politicaleconomytend to fall into
differentareas of the space definedby the threesituationaldimensions?
Second, to what extent does readiness to resort to associated sets of
strategiesappear to differin securityaffairsand political economy?
Third, what aspects of cooperationin securityaffairsand politicalecon-
omy are not explained by the core approach employed in this volume?
Finally,what additionalsituationaland strategicvariablesmightimprove
the quality of explanation?
In the concludingessay,RobertAxelrod and RobertKeohane consider
these questions. They begin by examining the fit between observed
cooperationand conflict,and the threesets of situationalpreconditions.
They then review the case studies,assessing the possibilitiesand limits
of strategiesto alter payoffstructure,to lengthen the shadow of the
futureand create favorableconditionsof play, and to reduce numbers
24 WORLD POLITICS
ofplayers,withparticular
emphasison reciprocity
and regimebuilding.
Axelrodand Keohane ultimately move towarda new synthesis. They
suggestthatinternational
regimescan reinforceand institutionalize
rec-
and thatnationshave enhancedtheprospectsforcooperation
iprocity,
by relyingon a combination
of atomisticreciprocity
and regimeestab-
lishment.