International Coordination and the Informational Rationale of Delegation

• In Event: Coordination and Information

Abstract

In contrast to existing rationales for delegation that are centered on the expertise of international organizations (IOs), we investigate the welfare effects of delegation if countries have information that IOs lack. In our model, countries transmit information through cheap talk and costly signals and benefit from international coordination and adapting policies to domestic circumstances. Although there are efficiency gains due to an IO's ability to solve commitment problems between countries, they waste more resources in signaling after delegating authority. With too much uncertainty, countries find it optimal to coordinate outside IOs. Perhaps counter-intuitively, more disagreement between countries strengthens the willingness to delegate and IOs may be efficiently designed with limited discretion to reduce the scope for costly signaling. The results are in contrast to the common understanding in the international relations literature that IOs generally allow countries to improve information transmission compared to ad hoc cooperation.

Authors

• Emiel Awad, London School of Economics and Political Science

• Nicolas Riquelme, Universidad de los Andes, Chile