Bargaining Failure Research Articles

Commitment problems and Russia's invasion of Ukraine

This paper applies the logic of commitment problems to deliver insights about the 2022 Russian invasion of Ukraine. In the canonical crisis bargaining framework, an anticipated power shift can cause bargaining failure. Bargaining breaks down in this context because a declining state reasons that fighting in the present from a strong position is preferable to negotiating in the future from a weaker position. I argue that this logic is relevant for understanding both Ukrainian and Russian decisionmaking in the lead-up to the invasion. The commitment problem logic also provides insight into the role of NATO in the conflict, highlighting flaws in existing arguments that the Russian invasion was “provoked” by NATO.

War and International Business: Insights from Political Science

How might businesses foster peace? We borrow insights from political science on the causes of war to guide IB scholarly research. We analyze war as a bargaining failure and present five causes of war (unchecked authority, intangible incentives, uncertainty, commitment problems, and misperceptions). We then identify business-for-peace initiatives (modifying incentives for war and peace, ex-combatant demobilization and reintegration, providing information, mediation and track-two diplomacy, peace guarantees, and community engagement) and propose research questions for each. Our work has important implications for IB scholars conducting research on firms operating in conflict-prone environments.

How Do "Bankruptcy Grifters" Destroy Value in Mass Tort Settlements? In Re Purdue Pharma as a Bargaining Failure

How Do "Bankruptcy Grifters" Destroy Value in Mass Tort Settlements? In Re Purdue Pharma as a Bargaining Failure

How does civil war begin? The role of escalatory processes

Correlational and bargaining failure approaches to the eruption of civil war have neglected the role of escalatory processes, whose analysis has to date been largely limited to sociology. Escalating violence involves mechanisms that are self-reinforcing and have a propensity to transform the political landscape by reshaping group boundaries and political identities, and prompting the formation of new actors. This article shows that such mechanisms should be considered as analytically distinct from structural causes and bargaining failures. Escalatory processes—that is, the combinations of these mechanisms—are often crucial to the eruption of full-scale civil war. But their causal significance in civil war onset varies with regard to two criteria: the speed of violent escalation and the extent to which it transforms the actor landscape. These two criteria form the basis for a typology of escalations into civil war that distinguishes civil wars erupting in revolutionary situations from deliberate escalation by organized belligerents and from gradual escalation through rebel group formation and counterinsurgency. I illustrate each ideal type with a case study that serves as a plausibility probe. Accounting for escalatory processes allows to distinguish between contrasting roads to civil war, each of which privileges its own explanatory variables.

Ultimatums, bargaining, and the duty to preserve alternatives to war

When can states justly make ultimatums? How should the recipients of ultimatums respond to them? This manuscript argues that because bargaining behavior like ultimatums and redlines causes war by generating bargaining failure, these behaviors should be scrutinized in the same ways that overtly aggressive acts like invasion are examined. It then argues that parties have a general duty to avoid eliminating alternatives to war. Ultimatums can only be justified if they satisfy the just war criteria of just cause, necessity, and proportionality. Likewise, the decisions to reject ultimatums can impair later claims that a state is fighting justly if they do not reflect the same criteria.

Why Is Civil Conflict Path Dependent? A Cultural Explanation

Empirical investigation suggests that conflict is path-dependent, i.e., current conflict leads to more conflict in the future. However, there is very little formal theory for why conflict path dependence exists. We propose a mathematical model to explore one possible pathway to explain the persistence of conflict once it starts. In this model, there are three types of cultures in two boundedly rational populations. The two populations are State Actors and Insurgents. The three cultures are Peaceable, Warring, or Bargainers. The distribution of these types is different in each population. Evolutionary dynamics determine which of these three cultures might predominate. Our simulations suggest that it is rational for people to learn to be warlike even in environments where State Actors are willing to give large side payments to “buy” peace to avoid bargaining failure. War can also be learned when State Actors and Insurgents are extremely patient and, therefore, potentially committed to Pareto improving peace deals. The outcomes of these simulations suggest that cultural learning can be a hitherto ignored explanation for why conflict is path dependent. If culture is indeed a possible cause for conflict, the best intentions of technocratic peacemakers trying to build frameworks for resource sharing and/or institutional building may fail, simply because such structures are not suited to local conditions. On the flip side, our model also provides theoretical reasoning for the observation that conflict is not a deterministic outcome of bargaining and commitment failures.

Contract Design When Relationship-Specific Investment Produces Asymmetric Information

Under conventional contract theory, contracts may be efficient by protecting relationship-specific investment from holdup in subsequent (re)negotiation over terms of trade. This paper demonstrates a different problem when specific investment also provides significant private information to the investing party. This is fairly common: for example, a manufacturer invests to learn about its buyer’s idiosyncratic needs or a collaborator invests to learn about a joint venture. We show how such private information can lead to subsequent bargaining failure and suboptimal ex ante relationship-specific investment. We also show that this inefficiency is worse if the parties enter into a binding and renegotiable contract to trade before the investment is made. This may explain why some preliminary agreements are expressly nonbinding. Finally, we demonstrate that parties may reduce inefficiency by agreeing to negotiate in good faith or other such knowledge-based provisions, especially when these promises are backed by expectation rather than reliance damages.

The Enemy Votes: Weapons Improvisation and Bargaining Failure

Belligerents could in principle avoid the ex post costs of conflict by revealing all private information about their violent capabilities and then calculating odds of success ex ante. Incentives to misrepresent private information for strategic gain, however, can cause miscalculations that lead to war. I argue some private information can lead to miscalculation not because it is purposefully misrepresented for strategic gain but because it is too decentralized to be easily revealed. The decentralized private information that produces improvised weapons requires a process of discovering suitable local resources and battlefield testing driven by local military entrepreneurs which frustrates information revelation. Decentralized private information used to improvise new weapons and capabilities like those which emerged in Iraq, Afghanistan, and Syria show that it can take many years, decades, or even an indeterminate amount of time for fighting to reveal relevant information about violent capabilities.

The Rotten Carrot: US-Turkish Bargaining Failure over Iraq in 2003 and the Pitfalls of Social Embeddedness

ABSTRACTSide-payments are commonly used in international relations to alter the foreign policies of states. Despite their frequent usage, however, our understanding is very limited as to why certain side-payment negotiations succeed, while others fail. This article tries to remedy this shortcoming. It argues that social embeddedness between actors involved in the negotiations has a major bearing on bargaining outcomes. Under ideal circumstances, social relationships can be used to reduce information asymmetries and increase trust. But in the presence of fractured social networks, social ties can foster information bias and distrust, ultimately increasing the likelihood of bargaining failure. The US-Turkish bargaining failure over the Iraq intervention in 2003 is used to illustrate and test this theory.

Concession and Secession: Constitutional Bargaining Failure in Post‐Communist Czechoslovakia

AbstractThis article explains the dissolution of Czechoslovak federation. It shows that the breakdown in bargaining between Slovakia and the federal center in Prague resulted from the federal institutional framework, differences in fiscal policy preferences and elite patronage incentives to monopolize the spoils of state property sell‐offs. Relatively less developed minority regions often seek greater autonomy in order to redress their economic backwardness through interventionist economic and social policies. Due to its veto powers, Slovakia was able to block central legislation, setting the stage for the divorce. At the same time, the federal government in the center was committed to a laissez‐faire strategy of governance, which precluded any significant accommodation of the periphery. (Mostly) Czech politicians understood that yielding to Slovak claims would threaten to undercut their pro‐market strategy and diminish Prague's exclusive access to the spoils of market reforms. In terms of the bargaining model, the center was not dependent on the periphery, which possessed a credible exit option. In fact, the periphery was perceived as a hindrance to the center's ability to pursue its fiscal goals and a fast economic transition, and as limiting Prague's exclusive access to a nascent revolving door between the upper echelons in politics and business.

Success and failure of bargaining in merger control: The case of asset divestitures

This paper studies the bargaining over merger asset divestiture in the shadow of appeal litigation. We provide theoretical foundations for a recurrent empirical finding, namely that the opportunity cost born by the merging firms due to merger control has direct consequences for the remedy divestiture agreement. Increased severity of the appeal court improves the imperfect merger screening implemented by the agency through remedy negotiation, which possibly argues in favor of a judicial complement to the “regulatory” merger policy enforcement. But the main recommendation for agencies is to devise tools to better deal with the asymmetric information that limits the effectiveness of their merger policy enforcement.

Prewar Mobilization and the Termination of Interstate Wars

Recent work on interstate crisis bargaining focuses on the inefficiency of public statements of resolve. This article reevaluates the inefficiency of public threats by examining how public-versus-private crisis mobilization affects the duration and outcome of interstate wars. Private mobilization is a purely material move that only provides capability benefits after war onset, which makes it necessary to examine how private mobilization eventually effects a war-ending bargain instead of how private mobilization makes bargaining failure more likely. The empirical results find that private mobilization only increases the initiator's war outcome in the early months of the war, and has little effect on the outcome in lengthy, protracted wars. Using data on 75 wars from 1823 to 2000, the analysis estimates a competing risks duration model to evaluate the effect of private mobilization on the outcome of interstate wars.

Re-election Concerns and the Failure of Plea Bargaining

In this note, we provide a new explanation for the “failure” of plea bargaining. We show in a model of asymmetric information that a public prosecutor facing re-election takes cases to the courtroom to signal quality even when her welfare (absent retention motivation) is always higher from plea bargaining.

The Questionable Efficiency of the Efficient-Breach Doctrine

The doctrine of efficient breach is based on the belief that the risk of postcontractual bargaining failure under property rules is greater than the risk of the courts' miscalculation of damages under liability rules. The article presents the findings of two experiments that challenge this belief and suggest that courts systematically undercompensate promisees. Implementation of the efficient-breach doctrine might therefore lead to underdeterrence and inefficiency.

Does the Principle of Convergence Really Hold? War, Uncertainty and the Failure of Bargaining

Convergence occurs in war and bargaining models as uninformed rivals discover their opponent's type by fighting and making calibrated offers that only the weaker party would accept. Fighting ends with the compromise that reveals the other side's type. This article shows that, if the protagonists are free to fight and bargain in the time continuum, they no longer make increasing concessions in an attempt to end the war promptly and on fair terms. Instead, the rivals stand firm on extreme bargaining positions, fighting it out in the hope that the other side will give in, until much of the war has been fought. Despite ongoing resolution of uncertainty by virtue of time passing, the rivals choose not to try to narrow their differences by negotiating.

Political Theater or Bargaining Failure: Why Presidents Veto

This article tests two competing explanations of presidential vetoes—sequential veto bargaining (SVB) and blame game politics. According to the SVB model, vetoes are the result of uncertainty about the president's true preferences on legislation. According to the blame game model, vetoes result because Congress deliberately passes bills the president will veto as a means of communicating relative positions to outside audiences. This article implements a test of whether a veto was expected at the time a bill achieved final passage, reasoning that if a bill was seen as sure to be vetoed at the time of passage, the veto could not be the product of SVB. The evidence points toward blame game politics as a far more important cause of vetoes than SVB.

The effects of industrial conflicts and strikes in Nigeria: A socio-economic analysis

The main thrust of this paper is to analyse and discuss the socio-economic implications of industrial conflicts, particularly strikes, in Nigeria. Industrial conflict was identified as the discord that occurs when the goals, interest or values of different individuals or groups in an industrial setting are incompatible. This conflict is however, inevitable. Such attributes like refusal of union recognition, public policies, failure of collective bargaining, etc, were identified as some of the reasons and causes of industrial conflicts. However, the paper identified that the strike incidence and propensity in Nigeria are alarming. This paper further averred that while industrial conflicts, strikes and work stoppages affect tremendously the economic development of Nigeria through low national productivity, it also has serious sociological consequences such as the dislocation and severance of the socialisation function of work. The paper therefore, recommended that all stakeholders involved in industrial relations should adopt systematic and sustainable mechanisms – including collective bargaining in addition to political solutions toward arresting the embarrassing, incessant and recurring spate of strikes.

Re-Election Concerns and the Failure of Plea Bargaining

A new explanation for the failure of plea bargaining is provided. It is shown that a retention agent (i.e. median voter) can use convictions at trial as a signal of the quality of a prosecutor. This encourages a public prosecutor to take cases to trial even when both social welfare and her utility (absent the retention motivation) from plea bargaining is higher.

Strategic Allocation of Liquidity in the Inter-Bank Money Market

ABSTRACT This paper focuses on an ex post trading problem in inter-bank money markets. An “over the counter” inter-bank market is modeled in this paper. Relationship banking leads to private proprietary information that causes bargaining failure in such markets with positive probability. Both independent and interdependent bargaining games are studied. It is shown that the allocation is not constrained efficient under bargaining games without monetary intervention. Monetary intervention is characterized as state contingent market making by the Central Bank. Such intervention is shown to dominate under a variety of informational and bargaining assumptions. The literature on monetary policy design is thus extended in the present paper by providing a micro-rationale for Central Bank intervention and by characterizing the solution of state contingent market making in liquidity.

Privatising the public: marketisation as a strategy in public university transformation

In this study, the transformation of a Kenyan public university through marketisation and privatisation was investigated qualitatively. By focusing on senior university administrators, deans, department heads, union leaders, student leaders and senior scholars at Kenyatta University the study identified the reasons for, and strategies used to achieve, marketisation and the consequences. External factors – pressure by multilateral financial institutions and global trends in favour of the market place and private finance in higher education – and internal factors, including social demand for higher education alongside the government's budget rationalisation agenda, were the impetus for the transformation. Strategies used in marketisation included the corporatisation of university management through the de‐politicisation of the university chancellorship, competitive recruitment of the vice‐chancellor, administrative reconfigurations involving mergers and downsizing, registration of unions and revitalisation of student leadership and commercialisation of learning. These developments resulted in role conflicts over various offices, insider recruitment, administrative misalignment, loss of faculty power in governance, collective bargaining failure and disruption of learning and institutional instability.