Transcript Class 2 Lecture notes - Georgetown University

July 1: What is the role of international
organizations and do they really matter?
Abbot, Kenneth and Duncan Snidal. 1998. Why States
Act through Formal Organizations. Journal of Conflict
Resolution 42:3-32.
Last class take-home point
• Analytical tool:
– Time inconsistent preference problem
– A.K.A. (also known as):
• Commitment problem
• Present bias
Do IOs matter?
Dramatic action
• United Nations Security Council (UNSC) sanctions on
Libya
• International Atomic Energy Agency (IAEA) inspectors in
North Korea
• United Nations (UN) peacekeepers in the Middle East
• North Atlantic Treaty Organization (NATO) in Bosnia
• The Uruguay Round the World Trade Organization (WTO)
& the dispute settlement mechanism
Ongoing action:
• Global health policy (the WHO)
• Development (the World Bank)
• Monetary policy (the International Monetary Fund)
• Participation reduces the chances of war among
members
• Participation increases the chances of democracy
Various sizes:
• From:
– Asia-Pacific Economic Cooperation forum (APEC) $2 million budget (pays for their annual meeting?)
• To:
– European Union (EU) - verging on a sovereign state
– World Bank - >10,000 employees from 160 countries
(2/3 in Washington)
– IMF (Aug. 2008: $341 billion)
Specialized agencies:
• ILO
– http://www.ilo.org/global/What_we_do/lang--en/index.htm
• ICAO
– http://www.icao.int/icao/en/howworks.htm
• FAO
– http://www.fao.org/about/about-fao/en/
• Others:
– UNEP
• http://www.unep.org/Documents.Multilingual/Default.asp?DocumentI
D=43
– EBRD
• http://www.ebrd.com/about/index.htm
Finding research on IOs:
• Google Scholar!!!
http://scholar.google.com/
• ISI Web of Science
http://isiknowledge.com/
IOs allow for:
• CENTRALIZATION
– A concrete and stable organizational structure and an
administrative apparatus managing collective activities
• May allow for immediate action (UN Security Council)
• Or for specialization (OECD has >200 working groups)
• May have flexible design (IMF voting structure) or be rigid (UN
Security Council)
• INDEPENDENCE
– The ability/authority to act with a degree of autonomy
within defined spheres
Rational choice perspective:
• LEADERS found/use IOs when benefits of
cooperation outweigh (sovereignty) costs
• IOs produce collective goods in PD
settings & solve coordination problems
• Coordination problems?
– E.g., Battle of the sexes game
PD settings?
• Prisoner's dilemma
• http://www.youtube.com/watch?v=ED9gaA
b2BEw&feature=related
• http://www.youtube.com/watch?v=p3Uos2f
zIJ0
Prisoner's Dilemma:
• A non-cooperative, non-zero-sum game.
(Mixed game of cooperation and
conflict.)
• Individual rationality brings about
collective irrationality.
Example…
– You're reading Tchaikovsky's music on a
train back in the USSR.
– KGB agents suspect it's secret code.
– They arrest you & a "friend" they claim is
Tchaikovsky.
– "You better tell us everything. We caught
Tchaikovsky, and he's already talking…"
• You know that this is ridiculous – they
have no case.
• But they may be able to build a case
using your testimony and
"Tchaikovsky's."
• If you "rat" out your "friend" – they will
reduce your sentence.
• If not, they will throw the book at you.
Player 2
Player 1
Cooperate
w/friend
Defect (rat)
Cooperate
w/friend
Defect (rat)
-3, -3
-25, -1
-1, -25
-10, -10
• The same situation can occur whenever
"collective action" is required.
• The collective action problem is also
called the "n-person prisoner's
dilemma."
• Also called the "free rider problem."
• "Tragedy of the commons."
• All have similar logics and a similar
result:
– Individually rational action leads to
collectively suboptimal results.
Is cooperation ever possible in
Prisoner's Dilemma?
• Yes 
• In repeated settings
• Axelrod, Robert M. 1984. The Evolution
of Cooperation. New York: Basic
Books.
• So, IOs facilitate cooperation by
coordinating states on superior
equilibria/outcomes
• And lower the transaction costs of doing
so
Alternatives to the rationalinstitutionalist perspective
Realist theory
• States do not cede to supranational institutions the
strong enforcement capacities necessary to overcome
international anarchy
• Thus, IOs and similar institutions are of little interest
• They merely reflect national interests and power and do
not constrain powerful states
• Does realism = rational choice?
• Realism focuses on state interests - ignores
microfoundations (leader incentives, domestic politics)
Constructivist theory
• Where to ideas and preferences come from?
• Focus on norms, beliefs, knowledge, and
(shared) understandings
• IOs are the result of international ideas, and in
turn contribute towards shaping the evolution of
international ideas
• Vital for the understanding of major concepts
such as legitimacy and norms
Abbot & Snidal:
States use IOs to…
• Reduce transaction costs;
• Create information, ideas, norms, and
expectations;
• Carry out and encourage specific activities;
• Legitimate or delegitimate particular ideas and
practices;
• Enhance their capacities and power
Principal-Agent framework
• IOs are thus "agents"
• Their (biggest) members are the
"principals"
• Agency slack? 
– "bureaucratic" perspective
The principal-agent problem
• The agent works for the principal
• The agent has private information
• The principal only observes an outcome
• Must decide to reelect/pay/rehire/keep the agent
• If standards are too low, the agent “shirks”
• If standards are too high, the agent gives up
• We need a Goldilocks solution – set standards “just right.”
• We may have to accept some an “information rent”
– Either pay extra or accept agency slack (corruption?)
High Effort/skill
Nature
chooses
the state
of the
world
(“luck”)
od
Go
ect
l
e
Re
Government
Low Effort/skill
Voter
Bad
High Effort/skill
Government
Low Effort/skill
No
t
• If reelection criteria are too high, the
government will not supply effort when
exogenous conditions are bad.
• If reelection criteria are too low, the
government will not supply effort when
conditions are good.
• What should you do?
• Intuition: It depends on the probability of
good/bad conditions & on the difference in
outcomes when conditions are good/bad…
Solution?
• TRANSPARENCY?
Public choice/Bureaucratic theory
• IOs are like any bureaucracy
• Allow governments to reward people with cushy
jobs
• The bureaucracy is essentially unaccountable
• Seek to maximize their budgets
• Look for things to do
Back to rational-institutionalist view…
What do IOs do for their members?
• Pooling resources (IMF/World Bank, World
Health Organization) - share costs,
economies of scale
• Direct joint action - e.g., military (NATO),
financial (IMF), dispute resolution (WTO)
LAUNDERING
• Allow states to take (collective) action without
taking direct responsibility (or take responsibility
with IO support)
• Examples:
– The IMF does the dirty work
– UN Security Council resolutions - a form of
laundering?
• When an IO legitimates retaliation, states are not vigilantes
but upholders of community norms, values, and institutions
• Korean War - The United States cast essentially unilateral
action as more legitimate *collective* action by getting UN
Security Council approval
Neutrality
• Providing information
– Really?
http://www9.georgetown.edu/faculty/jrv24/IMFforecasts.html
• Collecting information
– Really! http://www9.georgetown.edu/faculty/jrv24/transparency.html
• Example
– Blue helmets:
– http://www.youtube.com/watch?v=O0n2YpwPWY&feature=PlayList&p=BBF5269792FC9ED6&playnext=1&
playnext_from=PL&index=15
Community representative
•  Legitimacy
• Articulate norms?
http://goodliffe.byu.edu/papers/catcascade
2.pdf
• Universal Jurisdiction (more than a norm a legal standard) – The CAT
• Honduras and the OAS??
Enforcement?
• The problem of endogeneity
– 100% Compliance may mean the IO is doing
*nothing*
– Be careful what conclusions we draw from
observations
• Compliance is meaningful only if the state takes
action it would not take in the absence of the IO
• IMF/World Bank CONDITIONALITY
Answers to today's question:
• IO's reduce transaction costs - costs of doing
business & coordinate on superior equilibria
• Enabling members to have:
–
–
–
–
–
LAUNDERING
Neutrality
Community representative
Enforcement
Legitimacy - shared beliefs that coordinate actors
regarding what actions should be accepted, tolerated,
resisted, or stopped
• To these ends IOs are created centralized &
independent
Analytical tools
• Time inconsistent preference problem /
Commitment problem / Present bias
• Research networking
• Prisoner’s dilemma
• Principal-Agent framework
• Realist theory
• Constructivist theory
• Public choice/Bureaucratic theory
Thank you