Pols 426 Lecture 5
R. Keohane, After Hegemony

Keohane claims that while there is considerable cooperation in the international system - as the global economy develops - out of this growing interdependence comes increased potential discord via governmental intervention and policy conflict

The central question for Keohane is - How can cooperation be organized in the world political economy when common interests exist?

Keohane takes mutual interests of states as given - does not ask where they arise or how created -
But wants to examine the conditions under which they (mutual interests) lead to cooperation

Keohane begins with the premise that even when common interests exist cooperation often fails

Keohane makes an empirical point - He begins by noting that there is far more cooperation in the international system (trade, financial relations, health, environmental protection …) then can be accounted for by the Realist perspective but he also suggests that those who take an Institutionalist perspective and argue that shared state interests create a demand for international institutions and rules and cooperation run the risk of being naïve about power and conflict and can overestimate the ease with which cooperation can be achieved and maintained in the international system

Institutions for Keohane are recognized patterns of practice around which expectations converge --- and these practice affect state behavior allowing for cooperation - further international regimes are arrangements for policy coordination created by the fact of interdependence - they are made up of rules, norms, principles, and decision-making procedures

Now - Keohane argues that realist and institutionalist predictions about the state of the international system during the twenty years after WW II are similar and "correct" - Both predict cooperation - Realists because of the presence of a political hegemon (The U.S.) and because of the demand for coordination due to interdependence - But as after the mid 1960's and the decline in U.S. hegemony, their predictions should diverge - institutionalist predict more cooperation and realists predict less cooperation.

While Keohane suggests that the Realist approach provides a better fit for the 70s and early 80s, he argues that there is still more cooperation than would be predicted without a hegemon

So the key questions are

1. Under what conditions can independent nations cooperate in the world political economy?
2. Can cooperation take place without a hegemon and if so how?
3. Specifically how do patterns of rule-guided policy coordination emerge, maintain themselves, and decay in world politics

Cooperation and International Regimes

Keohane begins with the assumption that international cooperation is valuable but difficult to ogranize --- in international economic and political relations we cannot rely on the market to work

Keohane argues that "cooperation occurs when actors adjust their behavior to the actual or anticipated preferences of others, through a process of policy coordination

Now what is cooperation -- it is not harmony - a situation where actors would pursue policies without regard for the interests of others to facilitate the attainment of others goals - harmony is a situation where actor interests happen to be in alignment

Cooperation - is a situation where actor policies would hinder the attainment of the goals of others but through a coordination process policies are adjusted so as to obtain cooperation rather than discord if polices were not adjusted -- behavior patterns are altered via coordination to achieve cooperation

International Regimes and Cooperation

Keohane argues that regimes exist and they can affect the likelihood of even "egoistic" nations to cooperate

An international regime is "sets of implicit and explicit principles, norms, rules, and decision-making procedures around which actors' expectations converge in a given area of international relations."

Principles are beliefs of fact causation and rectitude.
Norms are standards of behavior defined in terms of rights and obligations
Rules are specific prescriptions or proscriptions for action.
Decision-making procedures are prevailing practices for making and implementing collective choice.

An example - the international balance of payments regime

Principle - liberalization of trade and payments
Norm - the injunction to states not to manipulate their exchange rates unilaterally for national advantage
Rules - pegged exchange rates and procedures for consultation in the event of change - and later floating exchange rates

The various aspects of regimes - contain injunctions about behavior and they imply obligations though they are not enforceable

Keohane claims that regimes should not be viewed as new elements beyond the state centered international system, but rather as arrangements motivated by self interest - the key

Regimes help coordinate behavior but even so, rational individuals (nations too) who would benefit from cooperation often are unable to do so - they fail to coordinate their actions

To get at this problem Keohane starts by assuming that states are rational egoists and argues that most relations of interest in international politics can be characterized by a combination of mutual dependence and conflict, of partnership and competition --- or in the terms of game theory "mixed-motive games" -- situations where nations can mutually gain from cooperation but also have incentives to not cooperate (unilaterally) and gain more

The Prisoners Dilemma Game
Player B
Cooperate Defect
Player A Cooperate R,R (3,3) S,T (1,4)
Defect T,S (4,1) P,P (2,2)
Payoff ordering T>R>P>S

Public goods and collective action situations

PD Game is a problem because trust to cooperate even if communicated is difficult to establish because commitments are not binding - talk is "cheap" so if individuals or nations were to play the PD game once it is "rational" to defect - and players end up in a mutually undesirable situation (P,P).

Why - Defection is a "dominant" strategy and mutual defection is an "equilibrium solution"

But Keohane offers two "ways" that actors - here nation-states" might avoid the defection outcome of the dilemma

1. He notes that while actor are egoistic (self-interested), they nonetheless are not asocial. They exist within some social situation and in that they have shared experiences, ethical precepts, and expectations of future actions with identifiable individuals - "culture" even in anarchic but regime ridden international relations

The mafia example

2. Repeated Play --- the shadow of the future and Iterated Prisoners Dilemma - can be rational to cooperate - why not individually maximizing to forego long sequences of mutual cooperation (strings of 3,3 payoffs for one or a few temptation payoffs by unilateral defection (4,1) - because these are followed by long strings of mutual defection

When can the collective action problem be solved so as to have cooperation without a hegemon (one that can enforce all others to behave) -

1. when the number of agents is relatively small so all can monitor the behavior of others
2. when agents expect to interact for a long time
3. when agents can identify those that they are playing with
4. when agents can (and will) punish defectors

Hegemonic Cooperation in the Post Cold War Era

Recall - he argues that rational self-interested actors in situations of interdependence will value International Regimes as a way of increasing their ability to make mutually beneficial agreements

The question Keohane asks is how does hegemonic leadership operate -- or how does the hegemon construct international regimes that facilitate the right kind of cooperation from the standpoint of the hegemon itself

1. a necessary condition - sufficient military power to protect the Int pol economy from incursions by hostile powers
2. the hegemon then seeks to persuade others to conform to its vision of world order and to defer to its leadership

vision - international capitalism -free trade, property rights, and democracy (sort of) -- to get support for this vision and U.S. leadership, followers had to see that they received sufficient benefits from accepting or buying into this order and leadership

three key benefits followers received from partnering in the U.S. lead regime

1. a stable international monetary system - to facilitate international trade and payments -- U.S. role was to manage the monetary system
2. Provision of open markets for good - U.S. worked to reduce tariffs and remove discriminatory restrictions
3. Access to oil at stable prices - U.S. and U.S oil companies provided oil to Europe and Japan from the Middle East and from the U.S. itself

Hegemonic leadership by U.S not based simply on dictating terms but based upon providing a set of incentives to participants via formal trade and monetary regimes and a narrow company-based oil regime with occasional independent action

Keohane argues that the strategy worked in the short term - helped European and Japanese economy recovery and growth and global growth and the cohesion of the U.S. military alliance against the Soviet Union but
failed eventually because it did not institutionalize an oil regime that could have warded off rising threats to access at stable (cheap) prices and the regime did not maintain a strong resource base for the exercise of U.S. power

Keohane more generally argues that hegemons and the powerful can postpone adjustment to change and often do so and sometimes refuse to adjust to change until it is forced upon them - Keohane blames success and domestic interests gaining special privileges for not allowing adjustments to change and thus decline

Cooperation without Hegemony - Cooperation without a hegemon is more difficult but does happen so HOW
Material power matters but
Keohane argues that cooperation in mixed motive setting rests on 1. Expectations 2. Transactions costs 3. Uncertainty

Multilateral institutions and regimes must furnish the certainty and confidence that hegemons provided

As hegemony erodes the demand for regimes persists as the supply declines

Keohane argues that the international regimes in trade and money were sufficiently developed to provide for cooperation whereas oil collapsed

Some preliminaries for the iterated prisoners dilemma game simulation (SimSociety)

Recall the PD game
Player B
Player A Coop Defect
Coop c,c c,d
Defect d,c d,d

Where 1. c,c is mutual cooperation
2. c,d A cooperates and B defects
3. d,c A defects and B cooperates
4. d,d both defect - mutual defection

Now we can characterize a set of IPD game strategies by indicating the probabilities that a player will cooperate given each of the 4 outcomes (noted above) of the game from the last or prior iteration and denoting for the very first iteration whether the player will choose to cooperate or defect so lets denote

1. P(1) as the probability of cooperating on the current iteration given that c,c was the outcome from the last or prior iteration
2. P(2) as the probability of cooperating on the current iteration given that c,d was the outcome from the last or prior iteration
3. P(3) as the probability of cooperating on the current iteration given that d,c was the outcome from the last or prior iteration
4. P(4) as the probability of cooperating on the current iteration given that d,d was the outcome from the last or prior iteration

Thus as strategy can be defined as

[ P(1), P(2), P(3), P(4)]

with the addition of a cooperate or defect choice stipulation on the first iteration

So a strategy that always cooperates (All-c) can be represented as - cooperate on the first round and
[1,1,1,1]

A strategy that always defects (All-D) can be represented as - defect on the first round and
[0,0,0,0]

Some classic strategies

Tit-for-Tat (TFT) cooperate on the first round and then choose whatever the opponent chose in the previous round
[1,0,1,0]

Pavlov - win stay - lose change - if you like the result from the last round continue doing what you are doing - if you do not then change
Cooperate on the first round and then
[1,0,0,1]

Grim - cooperate on the first round and then cooperate as long as the opponent cooperates - If the opponent defects then defect from that point forward

Generous TFT cooperate the first time and with 100% prob reward prior cooperation by the opponent - either c,c or d,c and with some probability cooperate after you instigated defection c,d and if there is mutual defection d,d
[1, r,1,r] where r is between 0.0 and 1.0

Mean TFT - defect on the first round - always punish prior defection and sometimes but not always reward prior cooperation
[q,0,q,0] where q is between 0.0 and 1.0

Some important characteristics of strategies

We can characterize strategies as

Nice (N) if they are never the first to intentionally defect
Nasty (A) if they are never the first to cooperate
Retaliatory (R) if they immediately defect after an unprovoked defection
Forgiving (F) if they have the propensity to cooperate after the other player has defected
Exploiting (E) if they intentionally defect while the opposition cooperates

All-C -- N,F
All-D - A,E
TFT - N,R,F
Pavlov - N,E,R
Grim - N,R
GTFT - R,F,E
MTFT - R,E

What kinds of strategies must agents use to survive and succeed in a world of anarchic self interested agents

How does cooperation develop in such a world - Why? What strategies seems to make this work and why?

What kinds of strategies seem to be able to maintain cooperation?

A guide to doing research on cooperation in Simsociety

We are interested in three types of questions and maybe others

1) Under what circumstances does cooperation arise in SimSociety
2) Under what circumstances is cooperation maintained in SimSociety
3) What strategies are successful in generating and maintaining cooperation and why?

In effect you will use SimSociety to run a set of experiments. Therefore you will want to establish some "lab" conditions.

I suggest the following basic research structure

1) Run the basic experiments with 60 agents (you may want to vary this later for fun)

2) Leave all setting (except the agent strategies) at their default settings - that is leave them alone - -again you may want to play with them later and yo an ask me about ones you find interesting

3) I suggest running your basic simulations for 20,000 iterations - this will not take very long

4) To address the question of if and how cooperation can be generated in an un-cooperative, anarchic world do the following experiment

Do a minimum of five runs of each of the following mixes

a) 50 All-D and 10 All-C
b) 50 All-D and 10 Grim
c) 50 All-D and 10 TFT
d) 50 All-D and 10 Pavlov
n based on your results and analysis how much to you have to adjust the "strategy mix" to consistently generate cooperation for each of the four cooperative type strategies

5) To address the question of if and how cooperation can be maintained do the following experiment

Again do a minimum of five runs of each of the following strategy mixes

a) 50 All-C and 10 All-D
b) 50 Grim and 10 All-D
c) 50 TFT and 10 All-D
d) 50 Pavlov and 10 All-D

Based on your results how sensitive are these results to increases and decreases in the number of All-D agents

As a variation you might see what happens with a more nasty, greedy exploiter -- Mean TFT vs the four

What features of strategies appears to make them successful or not in maintaining cooperation (that is what kinds of characteristics do they have) and how does this relate to Keohane's arguments about generating cooperation in mixed motive situations

Pols 426 Lecture 7 R. Keohane and After Hegemony and The Simulation SimSociety

Keohane argues that cooperation can be achieved and maintained by the presence of international regimes; principles, norms and rules guiding nation-state (agent) behavior. The various strategies of the iterated prisoners dilemma can be viewed as rule-based behavior and that norms or institutions of bilateral interaction may be represented as homogeneous systems of this rule based behavior. For an institution to exist in a population, it is not that all actor strategies are identical but rather that some behavioral characteristics are common to all members. Under these circumstances, these behaviors become norms and are institutionalized.

Ninety simulations of this artificial world of SimSociety were run. Each simulation was run for two million iterations. Several general patterns emerge from the simulation runs. First, as presented in Table 1, most simulation runs (83%) achieve a high level of cooperation (the average cooperation rate among agents is over 95%) at some point during the course of the simulation run. Fifty-nine (65%) simulation runs eventually end up in what appears to be a stable cooperative equilibrium (a high level of cooperation is achieved at some point in the simulation and is maintained until the end of the simulation) and sixteen simulation runs (18%) in a punctuated equilibrium (long periods of stable high levels of cooperation punctuated by periodic massive dips to near universal defection). Only 17% (15 runs) end up in a stable non-cooperative equilibrium (the average cooperation rate quickly declines and stays at less than 5% for the entire simulation run).

Table 1
Long Term Simulation Results
No Movement Global
Movement Local
Movement Total
Stable Cooperation 11
(37%) 24
(80%) 24
(80%) 59
(65%)
No
Cooperation 6
(20%) 6
(20%) 3
(10%) 15
(17%)
Punctuated
Equilibrium 13
(43%) 0
(0%) 3
(10%) 16
(18%)

First, cooperation in an anarchic, self-help world where there is both opportunities for conflict and cooperation and where there is long term interaction (shadow of the future) is quite likely to occur. But it is not guaranteed to either happen at all and if achieved to last; it can collapse -- So in Keohane's terms cooperation without a hegemon is certainly possible.
Second, the transition from near universal defection to near universal cooperation is always characterized by two features; networks of cooperative agents form and these networks are comprised of agents employing versions of the Grim strategy.
When there is a relatively rapid transition from a non-cooperative to a highly cooperative world, a version of the Grim strategy dominates numerically and appears to help produce this transition. Indeed, the Grim strategy dominates all (75) transitions to cooperation for the long-term results with the initial random strategy mix of agents, as well as all transitions to cooperation for the short-term simulation results. In one sense, Grim is a rather odd strategy to act as the catalyst or transitional strategy to more cooperative worlds populated by Generous TFT or Pavlov. Like TFT, Grim is nice and not nasty. But, unlike TFT, it is not very forgiving. It appears to succeed in invading the world of agents that are essentially almost pure All-D because it is provocable, retaliatory, nice, and only slightly forgiving (DC probabilities range from .05 to .3). It is the characteristic of being basically unforgiving that appears to allow Grim to build cooperative networks that can withstand invasion and fragmentation by All-D. When networks are small and fragile, agents that employ strategies that are too forgiving are dangerously susceptible to invasion, constituting weak links in the network.

As noted earlier, the emergence of small, relatively stable nodes or networks of agents characterize every transition from uncooperative to cooperative worlds. The importance of the formation of networks is strengthened by the fact that when the probability of agent movement is made higher, cooperation does not occur and no networks or clusters form (even when it is sometimes the case that Grim-like agents dominate the world). The networks of cooperative agents form what could be considered to be primitive social networks or the basic foundations of "communities." The interactions within these communities are almost universally cooperative but, when defection occurs, it is immediately met with reprisal with little chance for contrition for DC or CD results. As the nodes become large enough so that cooperative neighbors surround some agents, those surrounded agents receive multiple cooperative payoffs per turn.
Cooperation requires a primitive form of organization and community and a very tough stance toward non-cooperative behavior - Retaliation and non-forgiveness are important features - International regimes, in order to survive need some "mass" and organization and they must punish free riders and potential exploiters - All must punish exploiters in place of the hegemon and forgiveness at least initially cannot be tolerated without a hegemon.
Third, high levels of cooperation characterized by large clusters of cooperative agents may collapse. When cooperation collapses, it is usually because the networks of Grim-like agents evolve into networks made up of agents with strategies that are "too nice." The typical pattern that leads to collapse is the upward drift in the probability of cooperating following a c,d outcome. In these cases, average c,d probabilities drift up to over .8. These agents, having a strategy mix such as [.99, .85, .10, .07], can easily be taken advantage of allowing nasty strategies to emerge and succeed. This leads to a typically long and slow (up to 100,000 iterations) decline to near total defection. Cooperation does not end quickly. It changes or decays very slowly - almost invisibly in short periods of time. The generation of too many nice strategies makes successful exploitation too easy leading to the collapse of cooperation. We can liken this situation to the "classic predicament of societies going 'soft' --- Nice agents like and succeed in a very cooperative world where almost all interaction is cooperative and they "forget" over time that they must punish defection --- particularly when they cooperated (c,d) but also after mutual defection (d,d) -- Pavlov does well in cooperative environments - indeed by being exploitative (defect after d,c), but because it does not punish mutual defection, it is itself subject to exploitation --- Regimes that have a norm of reciprocity and also one where defections are consistently sanctioned even when it is costly to the particular agent that must sanction are much more likely to last - maintain cooperation
Fourth, we can assess whether groups of agents with various types of cooperative strategies can "invade" a set of All-D [0,0,0,0] agents. We start with 50 All-D agents randomly distributed on the grid, and 10 agents also randomly distributed on the grid for each of the following four types of cooperative strategies; initially "pure" TFT [1, 0, 1, 0], Pavlov [1, 0, 0, 1], Grim strategies [1, 0, 0, 0], and All-C [1,1,1,1]. Five simulations of each strategy mix (i.e., 50 All-D and 10 TFT) were run for both local and global movement where each simulation was run for 200,000 iterations

Table 2
Short Term Simulation Results
Indicating the percentage of Runs that Achieved Stable Cooperation
Overall Grim TFT Pavlov All-C
Low Mutation
d=.1 Local Movement 60%

n=20 100% 100% 40% 0%
Global Movement 55%
n=20 100% 100% 20% 0%
Medium Mutation
d=.3 Local Movement 95%

n=20 100%
100% 100%
80%
Global Movement 85%
n=20 100% 100% 60% 80%
High Mutation
d=.5 Local Movement 100%

n=20 100% 100% 100% 100%

Global Movement 100%
n=20 100% 100% 100% 100%

Not surprisingly, "invasion" is more successful with a set of Grim and TFT agents than with a set of Pavlov or All-C agents. The relatively very short time it takes a small number of initially pure TFT, or Grim strategies to dominate and create a cooperative world (an average of approximately 4,800 iterations) reinforces earlier observations. Non-cooperative worlds can be invaded by nice agents but they must be willing to retaliate. Forgiveness is ok (TFT) but greed coupled with openness to being exploited (Pavlov) is dangerous because it can prevent successful invasion and/or allow nasty agents to collapse an attained cooperative world.
Summary: The results indicated that norms of niceness, and retaliation must be institutionalized if cooperation is to emerge and be maintained. Norms of nastiness do not generate cooperation - agents (nation-states) must be willing to initiate cooperation. Cooperation cannot be generated or maintained by institutions characterized by exploitation unless they also are nice. Cooperation cannot be generated or maintained by institutions characterized by niceness and forgiveness unless they are also coupled with retaliation.