Asymmetrical Alliance and Formation of Rivalry through a Two-stage Bargaining

• In Event: Alliances and War

Abstract

Does cooperative bargaining lead to the formation of hostile relationship between allies? Under what conditions, cooperative arrangements might expose conflicting interests and mutual threat perception to the point of the termination of alliance or breaking out of rivalry? This study is interested to explore how the asymmetries of dependence between allies structure incentives for exploitative behavior of the more powerful ally, leading to the formation of rivalry relationship through a two-stage bargaining.

The asymmetrical support relationship that third world leaders build with a powerful neighbor often involves a two-stage bargaining. If an alliance is formed between two states with asymmetrical level of dependence on each other, often time the most dependent partner discounts time (aka future threat from its ally) in its first bargaining stage in time t (to form alliance) as an immediate way out to an impending challenge (aka threat of invasion, regime survival). In this stage, the more powerful ally accepts the initial cost of engaging in the alliance due to prospective future gains from its partner. However, within such an alliance structure, the second stage of bargaining takes a different shape in time t+1, as the equilibrium points shift once the alignment is formed. The incentive for the more powerful partner to demand further concessions to materialize the prospective gains over time come into the surface, either due to its on-going cost of sheltering a weak and less useful ally or the asymmetry of its threat perception that makes it difficult to rationalize such cost to the domestic audience. On the other hand, the dependent ally, being rescued and going past the immediate challenge seek to minimize paying any rents to the dominant ally. The long term effect of such bargaining is likely to create frustration and rapture between allies prompting them towards hostile behavior. Failure to take the relationship to new cooperation equilibrium would lead to the breakdown of alliance and the onset of rivalry relationship.

The study develops a two-stage game theoretic modeling of third world alignments. In the first stage, it will formalize the incentives, costs and tradeoffs that the third world leaders face in the pre-alignment stage when it decides to form external support relationship through interstate alignment. The model internalizes the distinctive characteristics of the third world politics, the domestic threats to the third world leader’s survival in power as well as asymmetries that characterize the bargaining over third world alignment. The incentives of the external power for aiding the third world leader, particularly side-payments and policy concessions will be modeled in the first sage as well. In the second stage, the study formalizes whether the bargaining shifts from its focus on the domestic threats to the third world leader’s struggle for maintaining policy autonomy vis-à-vis the potential encroachment of the external power on its domestic politics. The second stage game will also focus on the implications of the commitment problem in terms of the prospect of alignment termination or the outbreak of conflict between the allied partners.

From the model, the study will develop concrete propositions to be empirically tested through statistical analysis. Since observational data are only available for formal alliances or crisis-specific military coalitions, the study codes the instances of third world alignments, both formal alliances/coalitions and informal support relationships, for all the third world countries for the period between 1960 to 2010. In the coding, it specifically identifies parties involved, origin and termination period of the alignments, concessions/payments made, internal threats to the third world leaders, interests of the external power in the concerned third world states and so on. With new data, the study conducts statistical analysis by testing the propositions developed from the game theoretic modeling.

Author

• Md Muhibbur Rahman, University of Texas at Austin