Milner 1992

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International Theories of Cooperation Among

Nations: Strengths and Weaknesses
Helen Milner
World Politics / Volume 44 / Issue 03 / April 1992, pp 466 - 496

DOI: 10.2307/2010546, Published online: 13 June 2011
Link to this article: http://journals.cambridge.org/abstract_S0043887100015677
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Helen Milner (1992). International Theories of Cooperation Among Nations:
Strengths and Weaknesses. World Politics, 44, pp 466-496 doi:10.2307/2010546
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Review Article
INTERNATIONAL THEORIES OF
COOPERATION AMONG NATIONS
Strengths and Weaknesses
By HELEN MILNER*
Joseph Grieco. Cooperation among Nations. Ithaca, N.Y.: Cornell University

Press, 1990, 255 pp.
Peter Haas. Saving the Mediterranean. New York: Columbia University
Press, 1990, 303 pp.
C OOPERATION among nations has become the focus of a wide

range of studies in the past decade, a subject of interest to political
scientists, economists, and diplomats.1 This academic effort has been
sparked in part by the increasingly visible attempts of states since the
early 1970s to organize cooperation in economic and security affairs. Ac-
tivities to achieve cooperative outcomes have probably been more prom-
inent in this period than at any other time since the end of World War
II. Then, as today, cooperation has proved to be as elusive to realize as
to analyze.
* I would like to thank David Baldwin, Robert Jervis, and Robert Keohane for their
helpful comments.
1
See, e.g., Stephen Krasner, ed., International Regimes (Ithaca, N.Y.: Cornell University
Press, 1983); Robert Keohane, After Hegemony (Princeton: Princeton University Press, 1984);
Robert Axelrod, The Evolution of Cooperation (New York: Basic Books, 1984); Robert Put-
nam and Nicholas Bayne, Hanging Together, 2d ed. (Cambridge: Harvard University Press,
1987); Yoichi Funabashi, Managing the Dollar, 2d ed. (Washington, D.C.: Institute for Inter-
national Economics, 1989); Martin Feldstein, International Economic Cooperation (Chicago:
University of Chicago Press, 1988); Charles Lipson, "International Cooperation in Economic
and Security Affairs," World Politics 37 (October 1984); Robert Jervis, "Cooperation under
the Security Dilemma," World Politics 30 (January 1978); Duncan Snidal, "Cooperation ver-
sus Prisoners' Dilemma," American Political Science Review 79 (December 1985); idem, "The
Limits of Hegemonic Stability Theory," International Organization 34 (Autumn 1985); Jeffrey
Frankel and Katherine Rockett, "International Macroeconomic Policy Coordination When
Policy-Makers Do Not Agree on the Model," American Economic Review 78 (June 1988);
William Buiter and Richard Marston, International Economic Coordination (Cambridge:
Cambridge University Press, 1985); Michael Taylor, The Possibility of Cooperation (Cam-
bridge: Cambridge University Press, 1987); Harrison Wagner, "The Theory of Games and
the Problem of International Cooperation," American Political Science Review 70 (June 1983);
John Conybeare, Trade Wars (New York: Columbia University Press, 1987); Oran Young,
International Cooperation (Ithaca, N.Y.: Cornell University Press, 1989).
World Politics 44 (April 1992), 466-96

THEORIES OF COOPERATION 467
During the past decade much of the international relations literature

about cooperation has adopted a distinct approach, which has tended to
focus on the systemic level of analysis, that is, on the sources of and con-
straints on cooperative behavior among states as a function of the inter-
national system. This tendency has been part of the recent general em-
phasis on systemic factors in international relations. Much of this
literature has also used game theory as its central tool of analysis. Indeed,
prisoners' dilemma (PD) has proliferated as the key metaphor of inter-
national politics. While not all of the literature has adopted these meth-
ods, much of it has been systemic and game-theoretic. This review ar-
gues that these methodological choices have contributed to both the
greatest strengths and the most glaring weaknesses of the literature in
explaining cooperation among nations.
The recent literature on international cooperation has made two gen-
eral contributions. First, there is now a consensus on a definition of co-
operation, which can help distinguish what behavior counts as coopera-
tion. Knowing what we mean by cooperation is certainly an important
first step. Second, the literature has developed propositions about the
conditions under which cooperation is likely to emerge, by using game
theory to model relations at the systemic level. In relying on only a few
assumptions, scholars have attempted to combine parsimony with ex-
planatory power. The next section examines the strengths of the current
literature; and the one following that considers how the same methodo-
logical approaches that give the literature its explanatory vigor also ac-
count for its greatest weaknesses.
THE STRENGTHS: A DEFINITION AND SOME HYPOTHESES
A notable feature of the recent literature on international cooperation is

the acceptance of a common definition of the phenomenon.2 Following
Robert Keohane, a number of scholars have defined cooperation as oc-
curring "when actors adjust their behavior to the actual or anticipated
preferences of others, through a process of policy coordination."3 Policy
coordination, in turn, implies that the policies of each state have been
adjusted to reduce their negative consequences for the other states.
This conception of cooperation consists of two important elements.4
2
See Keohane (fn. 1); Kenneth A. Oye, ed., Cooperation under Anarchy (Princeton: Prince-
ton University Press, 1986); Putnam and Bayne (fn. I); as well as Grieco and Haas.
3
Keohane (fn. 1), 51-52. This definition comes from Charles Lindblom, The Intelligence
of Democracy (New York: Free Press, 1965), 227.
4
Social psychologists and sociologists use a similar definition of cooperation. See Morton
Deutsch, "A Theory of Cooperation and Conflict," Human Relations 2 (1949); Talcott Par-
468 WORLD POLITICS
First, it assumes that each actor's behavior is directed toward some

goal(s). It need not be the same goal for all the actors involved, but it
does assume rational behavior on their part. Second, the definition im-
plies that cooperation provides the actors with gains or rewards. The
gains need not be the same in magnitude or kind for each state, but they
are mutual. Each actor helps the others to realize their goals by adjusting
its policies in the anticipation of its own reward. Each actor is not nec-
essarily out to help the other, though; it is the anticipation of bettering
one's own situation that leads to the adjustment in one's policies.
Defining what is not cooperation is also important. Cooperation is
usually opposed to competition or conflict, which implies goal-seeking
behavior that strives to reduce the gains available to others or to impede
their want-satisfaction. But there are other alternatives to cooperation as
well. Unilateral behavior, in which actors do not take account of the
effects of their actions on others, and also inactivity are alternatives to
cooperation. Although such behaviors may not attempt to lower the
gains of others, they can be considered uncooperative if they do not re-
duce the negative consequences for others of each party's policies. What
counts as cooperation thus depends on the two elements mentioned
above: goal-directed behavior that entails mutual policy adjustments so
that all sides end up better off than they would otherwise be.
One function of a definition is to enable us to classify different acts as
being an instance of the concept at hand. Having a widely accepted def-
inition of international cooperation should make it easier to agree on
which acts count as cooperation and which do not. Keohane, Kenneth
Oye's Cooperation under Anarchy volume, Joseph Grieco, and Peter Haas
all employ the same definition. They should therefore be able to agree
on what is cooperative behavior and what is not. Indeed, this seems to be
the case. Their disagreements are not about what constitutes coopera-
tion; they are about what causes it. This, however, may be fortuitous,
since the empirical classification of events as cooperative can be very dif-
ficult. Establishing the counterfactual may pose great problems: without
some process of policy coordination, would the states have behaved dif-
ferently? The strategic misrepresentation of preferences may add to this
problem. Determining the beginning and end of an attempt at coopera-
tion can also be problematic. Finally, it may not be easy to demonstrate
that each side adjusted its policies in the expectation of gains. Arriving
sons, The Social System (Glencoe, 111.: Free Press, 1951); George Homans, Social Behavior
(New York: Harcourt, Brace, Jovanovich, 1961); Gerald Marwell and David Schmitt, Coop-
eration (New York: Academic Press, 1975).
at a common definition of cooperation is an important first step, then,

but it does not alleviate the empirical difficulties in using the concept.
Cooperation can be achieved in a number of ways.5 It can be tacit and
occur without communication or explicit agreement. The metaphor of
iterated prisoners' dilemma captures this type of situation, as Axelrod
shows in The Evolution of Cooperation. Explicit agreement is not neces-
sary; rather, cooperative behavior emerges as the expectations of the ac-
tors converge.6
Cooperation can also be negotiated in an explicit bargaining process.
This appears to be the most common type of cooperation examined by
the recent international relations literature. Keohane, in After Hegemony,
and Oye's Cooperation under Anarchy examine processes of conscious, ne-
gotiated policy coordination. Grieco focuses on negotiations surrounding
the distribution of gains among states and seeks to explain the different
levels of cooperation achieved on various nontariff barrier (NTB) codes in
the Tokyo Round of the GATT trade negotiations. Haas explores the ne-
gotiation and performance of the Mediterranean Action Plan to reduce
pollution in the Mediterranean. He looks to explain cooperation by ex-
amining the impact of ideas and learning promoted by a cohesive scien-
tific community. Explicit cooperation, as in these cases, is easier to iden-
tify than is tacit cooperation, since in the latter the counterfactual is
especially difficult to establish.
Finally, cooperation can be imposed. The stronger party in a relation-
ship can force the other side to alter its policies. If the stronger party also
adjusts its own policies and attempts to realize mutual gains, cooperation
has occurred. Some versions of hegemonic stability theory explain coop-
eration in these terms. Joanne Gowa notes that a hegemon can serve as
the functional equivalent of a common authority in international politics
and thus can promote cooperation.
As is true of citizens in dominant societies with well-established political
regimes, states operating within a subsystem established by a dominant
state are either empowered or constrained to cooperate: would-be cooper-
ators can elect to cooperate secure in the knowledge that the dominant
power will prevent their exploitation; would-be defectors are deterred by
the expectation that the dominant power will sanction defection.7
5
The three forms used here were suggested by the discussion of regimes in Young (fn. 1),
87-96.
6
See Thomas Schelling, Strategy of Conflict (Cambridge: Harvard University Press, 1960),
for a discussion of focal points; see also the work on tacit signaling among firms, e.g., Michael
Spence, Market Signaling (Cambridge: Harvard University Press, 1974).
7
Gowa, "Anarchy, Egoism, and Third Images: The Evolution of Cooperation and Inter-
national Relations," International Organization 40 (Winter 1986), 174.
470 WORLD POLITICS
The notion of cooperation imposed by a stronger player may seem anom-

alous, but as long as mutual policy coordination to realize joint gains
occurs, then it is cooperation by our definition. The joint gains in such a
situation need not be equal, however. Indeed, the more asymmetric the
power relationship, the more unequal the distribution of gains is likely
to be. But it does not follow that the asymmetries of gains will always
favor the stronger state; and, as will be discussed later, the opposite may
well be true more of the time. In any case, the definition of cooperation
itself says nothing about how the mutual gains from cooperation will be
distributed. The conditions that facilitate cooperation, though, may.
Although a commonly accepted definition of cooperation seems to ex-
ist in the literature, this has not eliminated the problems of identifying
events as cooperative or not. It has, however, reduced argument over the
concept and allowed hypotheses about cooperation to be developed. A
second supposed contribution of the recent international relations liter-
ature has been the development of hypotheses about the conditions under
which cooperation is likely to occur. While these hypotheses do not con-
stitute a theory of cooperation, they do suggest a series of variables that
might affect the likelihood of the emergence of cooperation among
nations. At least six different hypotheses can be culled from the litera-
ture. Each of these has problems and remains tentative.
ABSOLUTE GAINS, RELATIVE GAINS, AND RECIPROCITY HYPOTHESES

A central proposition in the literature is that states cooperate in order to
realize absolute gains. Following economic reasoning, it is posited that
states act rationally to increase the net benefits they receive. For instance,
in The Evolution of Cooperation, Axelrod assumes that states seek to max-
imize their utility. This is why cooperating in the PD situation is their
preferred strategy. But in an anarchic world maximizing absolute gains
in the PD is best achieved by following a strategy of reciprocity. Due to
cheating and the inability to sanction it, the optimal way to achieve ab-
solute gains is by using a Tit-for-Tat (T-f-T) approach to induce mutual
cooperation.
Axelrod, Keohane, and some authors in the Cooperation under Anarchy
volume argue that cooperative behavior may be more likely when states
pursue a strategy of reciprocity, because they know they will be punished
for defecting and rewarded for cooperating. For game theorists, the key
elements associated with reciprocity are sanctioning and iteration. Co-
operation (in the PD) is possible when defections can be punished, and
this is possible only when the game is repeated. Cooperation arises tac-
itly; it evolves over time as the actors' expectations converge. In more
complicated (and realistic) social interactions, the notion of reciprocity is

less straightforward. In these instances, as Keohane points out, its central
elements are contingency and equivalence.8 Reciprocity involves the ex-
change of roughly equivalent values of both goods and bads. Lack of
equivalence is likely to lead actors to misunderstand the strategy and
tends to produce escalating feuds rather than cooperation. What consti-
tutes rough equivalence is a difficult issue.
The core argument of Grieco's book challenges the absolute gains as-
sumption. Grieco argues that states also pursue relative gains, always
seeking to compare their absolute gains with those of other states. Rela-
tive gains are not their only concern; absolute gains do matter. But, in
this setting, cooperation, he suggests, is much more difficult even when
all sides can achieve absolute gains, because no state wants to realize
fewer absolute gains than any other. Concern for relative gains is thus
likely to impede cooperation. Grieco's argument is supported in part by
work done by Duncan Snidal, who shows that cooperation becomes
more difficult as relative gains concerns increase, thereby transforming
situations into and exacerbating PD.9
This argument leads to Grieco's central proposition about coopera-
tion. While his book is mostly about why cooperation should never oc-
cur, he does identify one condition that promotes it: the achievement of
a balanced distribution of gains.
Faced with both potential problems—cheating and gaps in gains—states
seek to ensure that partners comply with their promises and that their
collaborative arrangements produce "balanced" or "equitable" achieve-
ment of gains. According to realists, states define balance and equity as a
distribution of gains that roughly maintains pre-cooperation balances of
capabilities. To attain this . . . states offer their partners "concessions"; in
exchange, they expect to receive approximately equal "compensations" . . .
"no nation will concede political advantages to another nation without the
expectation, which may or may not be well-founded, of receiving propor-
tionate advantages in return." (p. 47)
Grieco's notion of balanced exchange sounds remarkably like Axelrod's
notion of Tit-for-Tat or Keohane's conception of reciprocity. Indeed, the
pursuit of absolute gains combined with reciprocity may be equivalent
to the assumption that states focus on relative gains. To say, as reciprocity
implies, that the absolute gains received for cooperating must be roughly
equivalent is to say, in effect, that states must achieve no relative gains in
8
Keohane, "Reciprocity in International Relations," International Organization 40 (Winter
1986), 5.
9
Snidal, "Relative Gains and the Pattern of International Cooperation," .dmen'can Political
Science Review 85 (September 1991).
472 WORLD POLITICS
the exchange. Balanced exchange, then, is central to explaining cooper-

ation for those assuming either absolute gains or relative gains motiva-
tions. The issue is really what leads to this desire for balance, or equiva-
lence—that is, fear of cheating or fear of strengthening the other. As we
shall explore later, these two motivations may not be that distinct either.
Grieco's cases seem to support his proposition: in the issue-areas where
a balanced exchange of gains could not be found, collaborative agree-
ment was not possible (chap. 7).10 The failure to find a reciprocal agree-
ment—that is, one in which "specified partners exchange items of equiv-
alent value in a strictly delimited sequence," to use Keohane's words"—
led to the breakdown of cooperation, a finding in line with important
research in social psychology and with Axelrod's central argument.12
Again, relative gains concerns may not differ empirically from absolute
gains pursuits when combined with reciprocity.
Two related points are raised by this discussion. First, what is bal-
anced, or reciprocal, exchange? Second, when is balanced, or reciprocal,
exchange possible? What balanced or equivalent means for the different
authors is unclear. It could mean that gains are distributed equally to all
players or that they are distributed proportionally to some value, such as
the players' prior power positions or their costs or investments in the
issue. In the first case, equal absolute gains imply no relative changes if
and only if the states are equivalent in all aspects. In the latter case, pro-
portional absolute gains imply no relative changes. This latter case seems
to be closest to the notion of reciprocity as commonly used.
Axelrod, for example, assumes in his game model that exchange is
balanced, the payoffs to the players being symmetric.13 This is a strong
assumption, which does not take us far if the key issue is when balanced
exchange can be achieved. Grieco's main criticism of Axelrod (and of
others) is that he neglects how the net benefits of collaboration are dis-
tributed among the players. But Grieco's own discussion does not ad-
vance us far either. He posits that any agreement that produces benefits
can be made roughly balanced if side-payments are possible (and states
can agree on what equivalent or balanced means):14 "The provision of
10
Also: "Disputes and strains in international institutions, and indeed the outright collapse
of international arrangements, may be rooted in their failure to bring about a balanced shar-
ing among partners of the gains and costs arising from joint action" (Grieco, 48).
11
Keohane (fn. 8), 4.
12
Studies in social psychology have also advanced this hypothesis. See, e.g., John Dutton
and Richard Walton, "Interdepartmental Conflict and Cooperation," Human Organization
25 (1966), 217; and Marwell and Schmitt (fn. 4), 53-55.
13
Axelrod (fn. 1), 30-31; for an argument against the idea that symmetry of the payoffs
matters for the outcome, see p. 17.
14
The issue of what states and their decision makers perceive as being "balanced" or
side-payments appears to be at the core of cooperative endeavors both

within and among states" (p. 231). But he has little to say about when
and how side-payments are made. In contrast, Haas shows repeatedly
how side-payments were used to induce cooperation. Issues were linked,
or even created, to be able to provide states with benefits from other
issue-areas: "Tradeoffs between the Med Plan components allowed for
side-payments leading to continued cooperation" (p. 184).15 Using side-
payments to equalize the benefits of cooperation for all the players may
then be an important step in arriving at a "balanced" agreement. The
question of what constitutes a balanced agreement is critical to identify-
ing the primary motivator of states' behavior: pursuit of absolute gains
or pursuit of relative gains. The issue of what circumstances enable bal-
anced exchange and side-payments to be reached is also important and
understudied.
NUMBER OF ACTORS HYPOTHESIS

A second hypothesis advanced by the recent literature deals with the
number of states involved in the issue. The hypothesis is that "the pros-
pects for cooperation diminish as the number of players increases."16 In
the Cooperation under Anarchy volume, the problem with large numbers
is related to the defection problem; it is posited that large numbers in-
crease the probability of defection and reduce the feasibility of sanction-
ing defectors. They create serious collective action problems for states.
This argument seems to suggest that two is the ideal number of players,
though the point is never explicitly stated. Indeed, the extensive use of
two-person games reinforces this impression.
Is it necessarily the case, though, that the fewer the actors the better
the prospects for cooperation? Several strands of argument challenge this
claim. First, if one is concerned about more than just cheating, such as
whether a balanced agreement can be struck, a larger number of players
may be better, since it provides more opportunities for exchanges and
side-payments. Grieco argues that "the state will prefer more partners,
for larger numbers would enhance the likelihood that relative gains ad-
vantaging . . . better-positioned partners could be offset by more favor-
able sharings arising from interactions with weaker partners" (p. 228).
"equitable" is also important and understudied. See Robert Jervis, "Rational Deterrence:
Theory and Evidence," World Politics 41 (January 1989); and Deborah Larson, "The Psy-
chology of Reciprocity in International Relations," Negotiation Journal 4, no. 3 (1988).
15
See Haas (pp. 78-79, 182-84) for examples. Haas does not believe, however, that side-
payments were the key to cooperation (see p. 188).
16
Oye (fn. 2), 18. It is unclear exactly which actors one is supposed to count: all potential
cooperators, only those who negotiate, or only those who agree to cooperate in the end.
474 WORLD POLITICS
Up to some point, then, more players may not necessarily hinder coop-
eration.
Second, the number of actors may not be a structural condition but
rather may be a strategic one that can be manipulated by the actors them-
selves. In such cases, situations involving large numbers can be broken
down into situations involving smaller numbers. As Lipson shows in his
article in Cooperation under Anarchy, due to the asymmetries in the size
of the various actors and in their influence, the many creditor banks were
able to coordinate their actions by splitting the negotiations over resched-
uling into parts; they thus reduced the number of creditors negotiating
with the debtors. There are, as well, other means to reduce the problems
stemming from large numbers.17
Third, as recent work in game theory shows, the possibility of coop-
eration in a relative gains environment can be enhanced by increasing
the number of players. Snidal argues that it is probably more dangerous
to suffer a loss in a world with fewer actors than in one with more play-
ers, since "more actors enhance the possibilities of protecting oneself
through forming coalitions and, generally, the less well united one's en-
emies, the safer one is."18 Concerns over relative losses can be attenuated
in a multilateral setting. These three points suggest that the relationship
between the number of actors and cooperation may be quite complex.
The logic linking the two is still not well understood and has not been
examined much empirically.
ITERATION HYPOTHESIS
A third hypothesis explaining cooperation focuses on the players' expec-
tations about the future. Their willingness to cooperate is influenced by
whether they believe they will continue to interact indefinitely. Many
have shown that adding repeated play (iteration) to the PD game makes
the cooperative outcome more likely,19 as, over time, the value of contin-
ued cooperation comes to outweigh the benefits of defection at any one
time. This depends, of course, on the rate at which the players discount
anticipated gains: the more heavily the future is discounted, the less
likely is cooperation.20 While some game-theoretic models and experi-
17
The principal supplier rule in GATT negotiations is an example.
18
Snidal (fn. 9), 716.
19
Iteration in different games has different effects. In a game of Chicken, it may not
promote cooperation.
20
Axelrod (fn. 1) and Snidal (fn. 9) show through simulation how increasing discount rates
makes the PD game more conflictual and cooperation less likely.
Robert Telser has shown (1) that even without reciprocity an agreement can be self-en-
forcing—that is, no outside party is needed to enforce it—"as long as each party believes
himself to be better off by continuing the agreement than he would be by ending it" and (2)
ments in social psychology have examined the impact of different dis-

count rates on cooperation, there is little theorizing about what condi-
tions generate enough iteration or a low enough discount rate to induce
cooperative behavior. Absent some theory about these two conditions, it
is all too easy to explain any instance of cooperation or defection by sim-
ply asserting that some change in these variables has occurred. As in the
Cooperation under Anarchy volume, this problem can be exacerbated
when authors vacillate between seeing these as structural variables (i.e.,
inherent in the situation) or more manipulable ones. Like the number of
players, the degree of iteration and the rate of discount may be alterable
by the actors and may depend on the perceptions and expectations of
decision makers. Subjective evaluations, that is, may be very important.
These kinds of issues make empirically evaluating the hypothesis about
the effects of iteration rather challenging.
INTERNATIONAL REGIMES HYPOTHESIS
A fourth hypothesis advanced to explain cooperation centers on the role

of international regimes, which are defined as sets of norms, principles,
rules, or decision-making procedures around which actors' expectations
converge. Regimes, it is contended, facilitate cooperation through the
functions they perform for states. They mitigate the effects of interna-
tional anarchy for states by aiding in the decentralized enforcement of
agreements. Again, the focus is primarily on the role of regimes in solv-
ing the defection problem. Regimes are seen as improving each side's
information about the behavior of the others—especially about the like-
lihood of their cheating and actual compliance. They are also thought to
change the pattern of transaction costs of cooperating by reducing "in-
centives to violate regime principles."21 Thus, regimes reduce states' un-
certainty and hence their fears that others will defect and in turn their
own propensity to do so. In the Cooperation under Anarchy volume Jer-
vis's discussion of the concert system and Lipson's chapter on the long-
term relationships among banks show how regimes may work to pro-
mote cooperation.
Others have noted, however, that the very existence of a regime indi-
cates a prior series of decisions by states to cooperate. Indeed, as Grieco
argues, the focus on defection misses this fundamental fact of an earlier
bargain to cooperate and the distributional politics surrounding it. The
that this occurs when two conditions are met: the sequence of interactions has no final ele-
ment and the future discount rate is low enough. See Telser, "A Theory of Self-Enforcing
Agreements," Journal ofBusiness 53, no. 1 (1980), 27.
21
Keohane (fn. 1), 90.
476 WORLD POLITICS
regime literature has also been attacked for its inattention to power is-
sues. The distribution of power internationally is seen as underlying re-
gimes and as being responsible for changes in them. A recent critic states:
For a very large class of global issues, . . . power needs to be given pride
of place. . . . Neoliberal speculations about the positive consequences of
greater information are fascinating (even if empirical demonstrations of
such benefits are scarce). But they obscure considerations of relative power
capabilities, which draw attention to how the payoff matrix was structured
in the first place, how the available options are constrained, who can play
the game, and, ultimately, who wins and who loses.22
Given their concerns about relative position, states are likely to disagree
about the amount of information they will release to others and about
the principles that define the regime. The latter principles determine
how the regime imposes costs and benefits on different actions. Thus, the
provision of information and the structure of transaction costs are highly
political issues.
This said, it is noteworthy that even the critics of the regime hypoth-
esis agree with its central points. Grieco critiques Keohane's arguments
about regimes by examining international trade negotiations conducted
within the existing trade regime, the GATT. He details disagreements over
trade rules regarding the provision of information. Clearly, states see
provision of information as a key political issue, but it is also apparent
that regimes can provide much information and this can be influential,
as the fears of some states reveal. For instance, in considering the un-
willingness of the EC to cooperate within GATT, Grieco explains that "as a
result of the rules all would enjoy some level of absolute gains in terms
of increased information about one another's subsidies, but non-Euro-
pean Community states would receive greater information about Euro-
pean Community programs than the reverse" (pp. 218-19). Again, a bal-
anced exchange of information is critical because reciprocity enhances
the likelihood of cooperation. In his conclusion Grieco echoes Keohane,
showing how the informational functions of the GATT promote coopera-
tion. Through "periodic reviews and safeguard clauses" in the GATT,
"states can seek redress to problems connected with the balance of rights
and obligations of membership," such a balance being necessary for co-
operative agreement. The GATT also provides for "periodic reviews and
renegotiation efforts," which serve as "voice alternatives . . . [making
22
Stephen D. Krasner, "Global Communications and National Power: Life on the Pareto
Frontier," World Politics 43 (April 1991), 366.
states] more willing to join such arrangements in the first place and, if
problems do arise, to remain loyal to them" (p. 234).
Haas, while hardly mentioning regimes, notes repeatedly the impor-
tance of the provision of information by other international organiza-
tions in the establishment of the Med Plan and later by the Med Plan
itself. Initially, members of the UN (the UN Environmental Program
[UNEP]) provided information that fostered cooperation: "By publicizing
the problem of marine pollution UNEP helped persuade Mediterranean
governments of the importance of accepting the new goal of environ-
mental protection, and even making nominal economic sacrifices to ac-
complish it" (p. 167). Later, the Med Plan developed its own information
functions: "States did come to appreciate the value of information and
diplomatic channels established by the Med Plan, and cooperated in areas
in which such benefits were made available" (p. 183).23 The role played
by the information-provision function of regimes in fostering coopera-
tion thus seems to be affirmed even by critics of the argument.
In addition, there is empirical evidence that regimes can reduce trans-
action costs for states negotiating collaborative agreements. Grieco, for
example, focuses on the EC as a major international actor in the GATT
negotiations. Indeed, it is surprising to find a "realist" taking the position
that an international organization like the EC can be an actor comparable
to nation-states like the U.S. and Japan, but clearly that is Grieco's view.
The existence of the EC lowered transaction costs by reducing the num-
ber of actors involved. Haas notes similarly that the "Med Plan also
served to reduce transaction costs between governments [by] holding an-
nual intergovernmental meetings and more frequent expert meetings"
(pp. 184-85).
The notion that regimes facilitate cooperation is lent some credence
by the books under review. But can the regime hypothesis tell us any-
thing about the tacit or explicit bargaining that occurs when cooperation
is initiated? If the cooperative agreement is made prior to the establish-
ment of the regime, then it cannot help. If, however, an established re-
gime in one issue-area aids in the negotiation of cooperation in another,
then the regime hypothesis may have broader significance. And if bal-
anced or reciprocal agreements are the key to successful cooperation,
then the functions of regimes that promote such balance may be impor-
tant. Keohane suggests one such function:
23
Haas claims later that this information-provision function was superseded as the pri-
mary function of the Med Plan regime (p. 185).
478 WORLD POLITICS
The nesting pattern of international regimes affects transaction costs by
making it easier or more difficult to link particular issues and to arrange
side-payments, giving someone something on one issue in return for help
on another. Clustering of issues under a regime facilitates side-payments
among these issues: more potential quids are available for the quo. Without
international regimes linking clusters of issues to one another side-pay-
ments and linkages would be difficult to arrange in world politics.24
Regimes then may promote the negotiation of balanced agreements, and
hence cooperation, in new areas through the issue linkage and side-pay-
ments they make available. This type of facilitation is evident in Haas's
study. The UN, through its UNEP, made side-payments to states that
would have to pay high costs in the Med Plan to get them to agree to
start the regime. Through "its principle of geographic distribution" of
rewards, the UNEP helped states find a balanced agreement as the basis
for the Med Plan (p. 79). Regimes in one issue-area may thus promote
cooperation elsewhere by allowing states to link issues in their search for
a balanced distribution of the costs and benefits of cooperation. This hy-
pothesis, like the others, calls for more empirical evaluation.
EPISTEMIC COMMUNITY HYPOTHESIS
A fifth hypothesis in the recent international relations literature deals

with the role of "epistemic communities" in advancing cooperation. Such
a community is "a professional group that believes in the same cause-
and-effect relationships, truth tests to accept them, and shares common
values; its members share a common understanding of a problem and its
solution" (Haas, 55). The existence of an epistemic community would
seem in this view to be a prerequisite for cooperation. But Haas does not
make this claim. Indeed, if an epistemic community seems as if it should
initiate cooperation by spreading its common understanding of an issue,
this is not what the Med Plan reveals. Ironically, initiation was less the
result of states learning from the epistemic community than of their per-
sisting in erroneous beliefs that the community knew were false. As Haas
describes it:
Many [national] officials thought pollution was a commons problem, and
thus required coordinated action throughout the region. They assumed
that currents transferred the pollutants fairly freely among countries, UNEP
officials were well aware that currents were not sufficiently strong to trans-
mit pollutants across the Mediterranean Basin . . . but they hoped to com-
plete an agreement, so they just smiled and nodded when others charac-
24
Keohane (fn. 1), 91. The idea of nesting comes from Vinod Aggarwal, Liberal Protec-
tionism (Berkeley: University of California Press, 1985).
terized Mediterranean pollution as a commons problem. Only later did
studies reveal to marine scientists that currents were too weak to fully
exchange the wastes between the northern and southern shores; regional
pollution was not a true collective good, and could be managed bilaterally
or subregionally, although this fact was never fully appreciated by foreign
ministry officials, who continued to accept pollution as a regionally shared
problem. This false perception actually facilitated resolution of the prob-
lem, (pp. 70-71)
Only later in the negotiations did the epistemic community provide in-
formation and side-payments that fostered agreement. Their role here
was similar to that of a regime. One difference between regimes and
epistemic communities seems to lie in the type of information each pro-
vides. Both can reduce uncertainty. But whereas a regime gathers data
on the preferences and compliance of other members, an epistemic com-
munity furnishes negotiators with "expert" information—a particular
solution or compromise that advances the negotiations by coordinating
states' expectations. Information from the community creates "focal
points" that promote agreement.25
Haas's central hypothesis about epistemic communities seeks to ex-
plain the extensiveness and durability of cooperation rather than its ini-
tiation. Haas hypothesizes: "The strength of cooperative arrangements
will be determined by the domestic power amassed by members of the
epistemic community within their respective governments" (p. 57). His
study shows that "the strongest supporters of the Med Plan were the
countries in which the epistemic community was most active" (pp. 218—
19). These actors reshaped their states' definition of the national interest
in ways that allowed those states to be more cooperative. Thus, epistemic
communities and domestic politics are linked. How the epistemic com-
munity penetrated domestic politics and altered states' preferences is less
well documented, however.
The epistemic community hypothesis has strong affinities with the
regime argument. Both reduce uncertainty, provide information, and fa-
cilitate negotiation. Haas's study prompts one to ask whether prior inter-
national regimes created the epistemic community. Without the UN, for
instance, would there have been an epistemic community and would the
Med Plan have been created? Futhermore, do not both regimes and ep-
istemic communities rely on prior agreements to cooperate and should
not these agreements be the focus of our attention? The regime and
epistemic community literatures would answer yes to the first question
25
Haas suggests as much; see chap. 8.
480 WORLD POLITICS
and no to the second: whereas initial agreements may be explained by

other factors, the strength and durability of collaborative arrangements
can only be explained in terms of regimes and such communities. These
claims require further examination.
POWER ASYMMETRIES HYPOTHESIS
A final hypothesis implicit in some of the recent literature suggests that

imbalances in power—often in the form of hierarchies—are conducive
to cooperation, an argument that resembles hegemonic stability theory.
These differences in influence allow stronger actors the greater role in
organizing the system; cooperation here is closer to the imposed variety
than to the tacit or negotiated forms of the preceding hypotheses.26
Grieco and Haas would expect these asymmetries to be reflected in the
cooperative bargain, with the stronger actors obtaining the more favor-
able terms. In both studies, interestingly, the weaker states—the EC for
Grieco and the southern states for Haas—obtain the better terms. Al-
though Grieco does not relate this to hegemonic stability theory, Haas
interprets his rinding that France did not prevail as a disconfirmation of
the theory, which may be an accurate assessment if he is referring to the
version of the theory implying that the hegemon uses coercion to extract
benefits for itself. But the asymmetries still contributed to the achieve-
ment of a cooperative solution; the stronger states were able to provide
benefits to the others to induce their cooperation, as benign versions of
hegemonic stability theory suggest. Thus, the argument that a single,
overwhelmingly powerful actor is necessary for cooperation may lack
support in these books; but the hypothesis that asymmetries in actors'
influence contribute to cooperation may be tenable.27
The recent literature on international cooperation has thus developed
at least six fairly powerful hypotheses to explain the phenomenon. The
hypotheses tend to derive from a few basic assumptions, to focus on sys-
temic or structural variables, and to rely on game theory. Each of these
hypotheses has its own problems and has only limited empirical support.
Nonetheless, they and the underlying common conception of coopera-
tion are the central achievements of this recent literature.
26
For instance, Conybeare (in Oye, fn. 2) argues that asymmetries in influence mean
weaker states can be more sure of retaliation by stronger ones, thus reducing their temptation
to defect. Lipson (in Oye, fn. 2) claims that asymmetry on each side allows the number oi
actors to be reduced, which facilitates negotiation.
27
For further support, see Snidal (fn. 1) about k-groups; and Barry Eichengreen, Elusive
Stability (New York: Cambridge University Press, 1990), 113-52, 271-311.
T H E WEAKNESSES: ASSUMPTIONS ABOUT INTERNATIONAL POLITICS

AND NEGLECT OF DOMESTIC POLITICS
The recent literature on cooperation suffers from at least two serious

drawbacks, both of which derive from its reliance on systemic theories
and game theory. The first problem flows from the assumptions used to
generate the relatively parsimonious hypotheses. In particular, the way
in which the assumption of anarchy is developed causes problems. Sec-
ond, and relatedly, the literature is remarkable in its neglect of domestic
politics. As will be argued, this poses a serious limitation for understand-
ing cooperation. Systemic theory simply cannot take us far enough.
Axelrod (The Evolution of Cooperation), Oye's Cooperation under An-
archy, and Grieco share a central assumption: that states exist in an an-
archic international system. From this common assumption, each draws
distinct conclusions. For Axelrod, anarchy signifies a "noncooperative"
PD situation. States, lacking a common authority, cannot make credible
threats or commitments to sanction defection; nor can they practice co-
operation. Their inability to make binding agreements and to commu-
nicate renders the game tacit—or noncooperative, in the language of
game theory. A final by-product of anarchy is the assumption of "ego-
ism," which is interpreted to mean that actors maximize their absolute
gains. Each of these deductions from the anarchy situation is debatable.
Schelling showed years ago that there are a variety of ways of making
one's threats and commitments credible in a system without a common
authority; and Gowa has argued that there can be functional equivalents
to such authority—such as a hegemon—which also enhance states' cred-
ibility.28 On the other hand, noncooperative games characterize domestic
politics as well. Lack of credibility in one's threats and promises is a
problem within states; governments, political parties, and business firms
all worry about their own capacity and that of others to live up to their
stated commitments.29 While the assumption of noncooperativeness is
intended to make the game situation more difficult and realistic, it may
actually lead to the opposite outcome. States can and do communicate,
and this communication is an important part of the game. Since situa-
tions are rarely as well defined and simple as the PD game, communi-
28
Schelling (fn. 6); Gowa (fn. 7).
29
Recent work in American politics also raises the issue of the credibility of promises. See,
e.g., Kenneth Shepsle, "Institutional Arrangements of Equilibrium in Multidimensional
Voting Models," American Journal ofPolitical Science 23, no. 1 (1979); and Kenneth Shepsle
and Barry Weingast, "Structure-Induced Equilibrium and Legislative Choice," Public Choice
37, no. 3 (1981).
482 WORLD POLITICS
cation is often essential to indicate what the payoff structures are and
what cooperation means. Gowa, Jervis, and Larson have pointed out that
without a common understanding of these elements, countries are likely
to end up in an escalating feud if they try to play Tit-for-Tat.30 Com-
munication, if it includes deception and persuasion, may make the game
nastier than noncooperative PD and may lead to reversed conclusions
about the benefits of reciprocity.
The argument that maximizing absolute gains flows from anarchy is
also suspect, as Gowa, Jervis, and Grieco note.31 States may focus on rel-
ative gains instead; they may be motivated by envy. Whether they are
egoistic or envious has little to do with whether the system is anarchic.
Moreover, both envy and egoism motivate actors within states, where
anarchy supposedly does not reign. The assumption of anarchy, em-
ployed to make the argument systemic, is accompanied by a series of
other assumptions, most of which flow from game theory and few of
which are systemic. Most tellingly, the solution to Axelrod's cooperation
problem at the systemic level—that is, reciprocity—is also the solution
to the cooperation problem among actors within states. As Alvin Gould-
ner noted thirty years ago, reciprocity is the fundamental cement that
holds society together.32
Grieco starts from the same systemic assumption as do Axelrod and
the Cooperation under Anarchy volume, but he proceeds to make a differ-
ent argument. For him, international politics is anarchic, but it is fun-
damentally about relative gains. As he stresses:
States are fundamentally concerned about their physical survival and their
political independence^ which] both result from and depend upon a state's
own efforts and thus its relative capabilities. As a result, states want to
know what the impact will be of virtually any relationship on their relative
defensive capabilities: hence the realist insight that states in anarchy are
generally defensive positionalists. Defensive positionalism, in turn, gener-
ates a relative-gains problem for cooperation: a state will decline to join,
will leave, or will sharply limit its commitment to a cooperative arrange-
ment if it believes that gaps in otherwise mutually positive gains favor
partners, (p. 10)
Grieco's argument has several steps, which he implies form a logical pro-
gression. In an anarchic world (1) states fear for their lives: this fear
means (2) that they can depend only upon their own capabilities to sur-
vive, (3) that changes in one's capabilities relative to other states are a
30
Gowa (fn. 7); cites in fn. 14; Robert Jervis, "Realism, Game Theory, and Cooperation,"
World Politics 40 (April 1988), 334-35; Grieco.
31
Gowa (fn. 7); Jervis (fn. 30); Grieco.
32
Gouldner, "The Norm of Reciprocity," American Sociological Review 25 (April 1960).
state's central concern, and finally (4) that states will not accept coopera-
tive agreements that are relatively unfavorable since this reduces their
security.
For Grieco, anarchy implies a Hobbesian worldview. States are liter-
ally seen in a state of war of all against all. States constantly fear for their
survival and see others as trying to dominate or destroy them. An "ab-
solutely necessary effect of anarchy [is] the danger states perceive that
others might seek to destroy or enslave them" (pp. 49-50). This is an
extreme depiction of the state's vulnerability in the international system.
Many have noted that states, being larger and more highly differentiated
institutions, have much less to fear in an anarchic situation than do in-
dividuals. The argument about interpersonal relations used by Hobbes
is stretched in the international context. The acuteness of states' insecu-
rity varies substantially as a function of conditions other than a lack of
common government. Jervis discusses a number of these conditions.
The fear of being exploited (that is, the cost of CD) most strongly drives the
security dilemma; one of the main reasons why international life is not
more nasty, brutish, and short is that states are not as vulnerable as men
are in a state of nature. . . . The easier it is to destroy a state, the greater
reason for it either to join a larger and more secure unit, or else to be
especially suspicious of others. . . . By contrast, if the costs of CD are lower
they can afford to take a more relaxed view of threats.33
The degree of fear states have for their survival varies importantly from
and independently of the lack of common authority.34 The more preva-
lent are conditions that mitigate states' vulnerabilities, the less germane
will be Grieco's argument.
Robert Powell further develops this point in a formal model.35 He
maintains that the assumption of relative versus absolute gains is less
important than the structural conditions facing states. The critical factor
is the cost of using force in the international system. If the costs are low,
then relative gains predominate and cooperation is unlikely. Such a sit-
uation creates opportunities for states to exploit relative gains to their
advantage. And when combined with anarchy (that is, when there is no
common government to ensure states will not exploit these advantages)
cooperative behavior is underminded. Where force is costly, relative
gains cannot be exploited, and cooperation will emerge, even in the pres-
33
Jervis (fn. 1), 172.
34
This is true domestically as well; with a common authority, the vulnerability of individ-
uals varies greatly. Living in New York City and living in Princeton, New Jersey, provide
different levels of security.
35
Powell, "The Problem of Absolute and Relative Gains in International Relations The-
ory" American Political Science Review (forthcoming).
484 WORLD POLITICS
ence of anarchy. The assumption of anarchy then does not imply relative
or absolute gains. Rather, anarchy is a constant, while other systemic
constraints vary. According to Powell:
The general problem confronting a state in this system is one of con-
strained optimization in which the units are trying to maximize their ab-
solute level of economic welfare subject to a set of constraints in which a
unit's current relative gain may be translated to a future absolute gain for
that unit and future absolute loss for the other units.36
This is one way of reconciling the arguments about absolute and relative
gains, but it does not explain Grieco's cases, where force is not a relevant
concern. The general point, though, is still valid: where conditions mit-
igate a state's sense of vulnerability, relative gains should matter less—
even in the presence of anarchy.
Next, Grieco argues, states must depend on their own capabilities, on
self-help: no state can afford to depend on any other, for "today's ally
[can] become tomorrow's enemy" (p. 47). Is self-help the best way to
preserve one's security in anarchy? Not, it seems, once more than two
actors are admitted to the model. With three actors in the system, coop-
eration between two may be far more efficacious than going it alone.
Indeed, balance of power theories based on anarchy predict this: states
will cooperate to counterbalance others whose relative power is growing.
In Grieco's two-person model cooperation is difficult; as Snidal shows,
however, the addition of more players increases the likelihood that
groups will cooperate to enhance their security. Indeed, the relative gains
of your allies in this situation may enhance your own security. Further-
more, failure to cooperate may have devastating consequences. If you
refuse to work with others, they may work together and gain even
greater relative advantages over you than they might otherwise.
This point casts doubt on the third step in Grieco's argument: that
fear of others and the necessity for self-help create a situation in which
the relative gains of others are always a cause for concern. Relative gains,
he argues, are not the only concern, but they are always central. States
must be "defensive positionalists" first and foremost.
Driven by an interest in survival and independence, states are acutely sen-

sitive to any erosion of their relative capabilities. . . . Capabilities—and
especially their amount and quality compared to others—are the ultimate
basis for state security and independence in the self-help context of inter-
national anarchy. As a result, realists find that the fundamental goal of
states in any relationship is not to attain the highest possible individual
36
Ibid., 24.
gain or payoff; instead, it is to prevent others from achieving advances in
their relative capabilities, (p. 39)
W h i l e G r i e c o is concerned w i t h b o t h absolute a n d relative gains, h e

gives priority to t h e relative element. A c c o r d i n g to his m o d e l , as each
state's sensitivity to relative gaps in payoffs from cooperation rises in a
two-person g a m e , t h e possibility of cooperation declines. A l t h o u g h h e
discusses w h a t influences this sensitivity only briefly (see p . 46), h e g e n -
erally assumes t h a t it is substantial.
A state's sensitivity coefficient to gaps in gains may vary according to its

partners, its own circumstances, and the type of cooperative endeavor to
which it has committed itself. Yet given the uncertainties of international
politics, and of the importance of relative power in interstate relations,
realist theory would expect every state's level of k to be greater than zero
in virtually all its cooperative relationships. . . . Thus gaps in payoffs fa-
voring partners will always detract from a state's utility to some degree,
(pp. 46M7)
C o n c e r n for relative gains should be a variable, b u t G r i e c o t e n d s to e m -

ploy it as a constant. As Snidal d e m o n s t r a t e s , this is a real p r o b l e m , since
variance in the concern for relative gains substantially affects t h e p r o s -
pects for cooperation. 3 7
Moreover, even if relative gains are central, does t h a t necessarily i m -
pede cooperation? As n o t e d above, a d d i n g m o r e players raises t h e like-
lihood of cooperation. A d d i n g issues should also increase cooperation.
T h u s , o n any single issue, t w o states m a y be directly opposed; b u t o n
several, they are likely to have different preference r a n k i n g s a n d be able
to m a k e exchanges across issues. 38
Each party's interests may appear to be opposed on specific items, but the
values and priorities underlying the set of issues often provide the basis for
cooperation.. . . [T]here are various ways of achieving [an agreement that
satisfies the more basic interests of all parties], including formulating pack-
age deals that involve conceding on issues of low priority in exchange for
reciprocal concessions on more important issues, logrolling, fractionating
larger issues into smaller segments. 39
T h e r e f o r e , the addition of either issues or actors, or b o t h , reduces t h e

difficulty of cooperation in relative gains situations.
37
Snidal (fn. 9).
38
If one assumes that states are identical and have the same preference rankings, this
argument fails. But such an assumption is heroic. Domestic politics are central here, too.
39
John Holmes et al., "Boundary Roles and Intergroup Conflict," in Stephen Worchel and
William Austin, eds., Psychology of Intergroup Relations, 2d ed. (Chicago: Nelson-Hall, 1986);
356.
486 WORLD POLITICS
While these points mitigate the pessimism of Grieco's argument by

suggesting that cooperation is possible even in relative gains contexts,
they are not fatal to his main point. He argues that the relative gains
dynamic and the absolute gains dynamic differ in the concerns they raise.
The latter leads to an emphasis on cheating and ways to prevent it. His
argument focuses on the terms of the agreement being negotiated, that
is, on the distribution of net benefits. He maintains that only balanced
agreements produce cooperation. This distinction between cheating and
the distribution of gains may be overstated, as was mentioned earlier. It
is true that for Axelrod and for the Cooperation under Anarchy volume
relative gains are not the focus of attention. This is a consequence of their
use of simple games. Payoffs are assumed to be symmetric, and hence in
PD one maximizes one's relative gains by cheating (DC). One fears
cheating on the part of others because that would maximize not only
their absolute advantage but also their relative one. Hence cheating in
PD is equivalent to maximizing one's relative gains. Furthermore, it
does not seem inconsistent with Axelrod's model to argue that as the
payoffs from cooperation (CC) become increasingly asymmetric converg-
ing on the sucker's payoff (CD), the likelihood of mutual defection (DD)
will rise, which is Grieco's point. Cheating in a tacit, sequential game
may be equivalent to obtaining an agreement whose relative gains are
unfavorable. The lack of interest in the nature of the cooperative solution
shown by Axelrod and the Cooperation under Anarchy volume is, never-
theless, an important oversight.
The claim of the absolute primacy of relative or absolute gains in in-
ternational politics is debatable. The assumption of anarchy cannot be
used to deduce either case. It is not anarchy that leads to relative gains
concerns, or absolute gains ones, but other factors. At different times
states at the international level are motivated by both concerns. And
within states, where common authority exists, actors exhibit both envy
and egoism.40 The characteristics of situations that make participants
more prone to relative or absolute calculations need more study (and
fewer assumptions). Here again scholarship about domestic politics may
contribute to theorizing in international relations once one drops the as-
sumption that anarchy means that international politics is radically dif-
ferent from domestic politics.41
40
Sociologists have been debating economists for years about this assumption for domestic
society. See, e.g., Brian Barry, Sociologists, Economists, and Democracy (Chicago: University of
Chicago Press, 1978).
41
For more on this problem and other arguments about the troubles caused by the as-
sumption of anarchy, see Helen Milner, "The Assumption of Anarchy in International Re-
lations Theory," Review of International Studies 17 (January 1991).
The final step in Grieco's argument deserves scrutiny as well. Even

assuming that all the preceding steps flow logically, does the link be-
tween relative gains and security follow? Does minimizing the relative
gains of others in every situation necessarily maximize one's own security
and independence? Note that Grieco does not claim that one should
maximize one's own relative gains. This is important, for otherwise the
security dilemma becomes operative, and each side's attempt to maxi-
mize could leave it less secure as the other side responded. Though min-
imizing the other's gains may avoid or mitigate this dynamic, will it
promote one's own security and power? Grieco's view of power is rather
crude. Any resource is a source of power, and hence of security, and thus
should not be bargained away. He notes in passing that
the level of [the state's sensitivity to relative gaps] is also likely to increase
if payoffs in a particular issue-area are more rather than less easily con-
verted into capabilities within that issue-area, or if those capabilities and
the influence associated with them are more rather than less readily trans-
ferred to other issue-areas, (p. 46)42
But issues concerning resource fungibility, conversion of capabilities, or
the positive-sum nature of power are never raised elsewhere. Further-
more, the character of power in a relationship is misspecified. As Hirsch-
man, Keohane and Nye, Baldwin, and others have shown, power in an
interdependent relationship flows from asymmetry: the one who gains
more from the relationship is the more dependent.43 Threats to terminate
the relationship differentially influence the side gaining relatively more.
The side with leverage then is not the one with the greatest relative gains,
but the one with the least. Giving relative gains to others may be a way
of reducing their influence and increasing one's own.
One response to this is that it may be true in particular instances. Thus,
although giving relative advantages to others may temporarily enhance
one's own power and security, over time one will be weakened by such
redistribution and one's security will be endangered. This admission that
giving relative gains to others can enhance one's position in the short run
at least is still damaging, for it reveals that no logical necessity links an-
archy and fear for one's security with minimizing the other's relative
gains. Indeed, in certain circumstances, allowing the other side to accrue
relative gains may enhance one's own security. Hence, depending on the
42
Note how similar this is to Powell's argument.
43
Albert Hirschman, National Power and the Structure of Foreign Trade (Berkeley: Uni-
versity of California Press, 1945); Robert Keohane and Joseph Nye, Power and Interdepen-
dence (Boston: Little, Brown, 1977); David Baldwin, "Interdependence and Power," Inter-
national Organization 34 (Autumn 1980).
488 WORLD POLITICS
situation a country may increase its security and influence by either de-
creasing or increasing the other state's relative advantages. This is evi-
dent not only in Hirschman's account of German behavior in the inter-
war period but also in Grieco's own cases. Grieco notes that the U.S. was
generally more powerful than the EC but that in the cases of successful
cooperation the EC received the greater relative gains. "The EC supported
those accords yielding it a favorable share of mutually positive gains[,
but] the EC restricted its support for accords it believed would produce
gaps in benefits favoring code partners, especially the U.S." (p. 68; see
also chap. 7, esp. 168-69, 216-20). Cooperation was achieved in the for-
mer areas and blocked by the EC in the latter areas. Why would the more
powerful U.S. agree to an outcome in which the EC gained relatively
more? There are two plausible responses: the U.S. was maximizing its
security by giving advantages to the Europeans a la Hirschman, or the
U.S. was not interested in relative gains. The latter conclusion is no bet-
ter for Grieco's argument than the former since it implies that variance
in states' sensitivities to relative gains may be very important: all states
may not be oriented primarily to relative gains, and thus cooperation
may not depend solely on the distribution of these gains.
This section has argued that the assumptions used to build systemic
models of international cooperation are not as simple and straightfor-
ward as they appear. The condition of anarchy, for one, is used to justify
a host of contradictory assumptions and outcomes: that states are abso-
lute gains maximizers or that they are relative gains minimizers; that
anarchy creates conditions resembling tacit bargaining or that it creates
conditions resembling full-scale negotiation. Each of these sets of as-
sumptions represents a different theory of international politics. More-
over, it is unlikely that anarchy dictates one or another of these condi-
tions all of the time. The motivations of states and the nature of the
international game depend on other factors, some of which, as Powell
shows, are systemic but many of which are located at the domestic level.
The neglect of domestic politics is then the second weakness of this
literature. The theories in Axelrod, Oye's Cooperation under Anarchy vol-
ume, and Grieco are concerned with the international systemic condi-
tions that affect the possibility of cooperation. Domestic factors are con-
sciously excluded or neglected.
Haas at least raises the issue of domestic politics, but even he deals
with it in only a glancing way. His study falls somewhere between the
international and domestic levels. He identifies a transnational epistemic
community but argues that it works through the domestic political arena
to change national preferences; that is, when a high level of uncertainty
surrounds an issue, decision makers are willing to give new scientific

elites access to the policy process. If these new elites can get their views
institutionalized in the domestic political arena, they can effect a change
in national preferences and foreign policy, enabling greater compliance
with internationally agreed upon practices. This process of domestic
change is important for Haas's argument, but he only describes and as-
serts the path of causality domestically. His sole test of the idea is to show
that states with older environmental bureaucracies were more supportive
of the Med Plan (Table 5.1 on pp. 132-33, 163). While this correlation is
suggestive, he has no theory about domestic politics that explains why
and when an epistemic community can have an impact on the domestic
system. He simply assumes that without the scientists' involvement, na-
tional policy would have been different.
There are two reasons for the neglect of domestic politics in the liter-
ature. One is the centrality of anarchy as the condition for differentiating
between domestic and international politics; the other is the use of game
theory, with its assumption of unitary, rational actors. This international
focus is problematic in that it rests upon a series of unexamined assump-
tions about domestic politics that are crucial to the results. Important
assumptions are made about three areas: the determination of the payoff
structures (or national interests) of states, the strategies available to states
to alter systemic conditions, and the capacity of states to ratify and im-
plement cooperative arrangements.
Game-theoretic models of international cooperation rest heavily upon
the specification of the payoff matrix, that is, upon the costs and benefits
states receive for different outcomes. These payoffs—exogenous to the
models—are simply assumed. As Benjamin Cohen notes, though:
The limitations, as every serious game theorist knows, lie in the method-
ology of game theory itself. . . . Even more critical is the familiar problem
of specifying player motivations. Game models . . . provide insights into
the strategic choices that can be expected of individual players once the
orderings of all the actor's preferences are fully detailed. . . . [T]here is
nothing in the essential logic of game theory that tells us how the config-
urations of preferences get to be determined in thefirstplace. By their very
nature, game models are silent on the subject of what initially motivates
players. Preference orderings at the outset are simply assumed to be ex-
ogenously—that is, arbitrarily determined. . . . The limitation of even the
most ambitious applications of game theory lies in the tendency to concen-
trate on what comes out of state conceptions of self-interest rather than on
what goes into them/'1
44
Cohen, "The Political Economy of International Trade," International Organization 44
(Spring 1990), 276-78.
490 WORLD POLITICS
The determination of preference rankings need not pose a problem

for theorizing at the systemic level. Theoretically, the payoffs could be
postulated to depend solely on international variables and not at all on
domestic ones. This, of course, is the approach of certain theorists of
balance of power and hegemonic stability.45 Snidal notes that a deductive
theory of preferences should precede the game model. He suggests that
these theoretical derivations could be wholly systemic but adds that
"state's preferences may not always be tightly linked to the objective con-
ditions. Perceptions and information processing, as well as organiza-
tional or bureaucratic imperatives, may change the relevant payoffs for
decision makers."46 Oye's introduction and Axelrod and Keohane's con-
clusion in Cooperation under Anarchy also note the importance of domes-
tic politics and perceptions for the payoff matrix. While a purely systemic
theory would require systemic derivations of the payoffs, all the payoff
derivations in the Cooperation under Anarchy volume depend to some
extent on domestic factors.47 For security issues, the perceptions of elites
play a sizable role, whereas in economic issues the internal distribution
of the costs and benefits of different international policies weighs heavily.
On the whole, as Haas also maintains, the internal character of states and
their elites is a central element in determining the preferences of states.
As indicated above, Grieco tends to overlook domestic variables. His
argument about relative gains is cast at the international level; the com-
parison is between national gains for different states. Grieco acknowl-
edges the drawbacks of his systemic approach by saying that "there is no
doubt that domestic political institutions and dynamics also shape a na-
tion's foreign economic goals and strategies and especially its foreign
trade policies"; but he justifies it nevertheless with the assertion that
"even in an area such as trade where domestic factors are unquestionably
operating, systemic-level factors still show themselves to be very impor-
tant" (p. 24).48 As in the Cooperation under Anarchy volume, however,
45
For the former, see Kenneth Waltz, Theory of International Politics (Reading, Mass.:
Addison-Wesley, 1979); and Barry Posen, The Sources of Military Doctrine (Ithaca, N.Y.:
Cornell University Press, 1985); for the latter, see Stephen D. Krasner, "State Power and the
Structure of International Trade," World Politics 28 (April 1976); David Lake, Power, Protec-
tion, and Free Trade (Ithaca, N.Y.: Cornell University Press, 1988); and Conybeare (fn. 1).
46
Snidal, in Oye (fn. 2), 42, and 40-44 for a wider discussion. Jervis (fn. 30) also makes
this point (pp. 324—25).
47
For Jervis, it is the nature of the domestic regimes that influences the concert system;
for Van Evera, the misperceptions of decision makers; for Conybeare, rent seeking by do-
mestic interests; for Oye, the domestic costs of and economic beliefs of elites about alternative
macroeconomic policies; for Lipson, the domestic relationship among banks (all in Oye, fn.
2).
48
Since he does not test domestic explanations against his international one, it is difficult
to support this claim.
introductory remarks declaiming systemic theories slip into inductive

case studies dependent on domestic factors. For instance, payoffs and
hence the likelihood of cooperation depend on the perceptions of deci-
sion makers. The high value placed by the Europeans on technical bar-
riers and government procurement codes—areas where cooperative at-
tempts failed—and the low value placed by the Americans on codes on
antidumping and countervailing duties—areas where cooperation was
more prevalent—are induced from the statements of policy makers
about their perceptions of the relative importance of these issues (Grieco,
e.g., 208-9). A priori theories of preferences based on systemic factors are
missing.
In another discussion, however, Grieco does have data suggesting a
priori the "national interest" (the addition of producer, consumer, and
foreign exchange gains) from the liberalization of agricultural trade. On
the basis of Table 7.6, which shows the estimated welfare and foreign-
exchange effects of a complete dismantling of all agriculture support pro-
grams, he concludes that "it is not surprising that the EC (as well as Japan
and the Nordics) resisted the U.S. vigorously on [eliminating] agricul-
tural export subsidies during the 1980s" (p. 180). But it is surprising:
according to the table (add columns 1-3), the biggest net gainers from
agricultural trade liberalization are Japan, Australia, New Zealand, and
marginally the EC. The U.S. is a net loser. This a priori preference struc-
ture predicts the opposite of what happens, and the way to explain this
outcome is through domestic politics: the privileged political position of
agricultural producers in Japan and the EC. Because of their domestic
political systems, gains to agricultural producers count more than gains
to consumers. In general, the problem with assessing relative national
gains is that one has to add up the net benefits for different domestic
groups to arrive at a national assessment. The aggregation of preferences
domestically is a difficult theoretical and practical issue. How to count
costs and benefits to different groups is a fundamental problem. Calcu-
lating national payoffs implies a theory of domestic politics.
This problem arises in Haas's book as well. Although he realizes that
"states may act based on interests that are derived internally, rather than
on those provided externally from their systemic positions," he also im-
plicitly injects his own theory of domestic politics. He argues that "an
ecological epistemic community was able to identify and successfully im-
posed new state interests which did not directly reflect systemic or struc-
tural principals" (p. 231). His assumption seems to be that national inter-
ests are determined by elites that control government bureaucracies; it is
a form of the bureaucratic politics argument. But, as his anomalous
492 WORLD POLITICS
French case shows, how bureaucratic interests are aggregated in policy-

making requires a prior theory of domestic politics.
The second area in which domestic factors intrude into systemic the-
ories of cooperation is the issue of strategy versus structural constraints.
The hypotheses generated about cooperation rest on supposedly struc-
tural conditions inhering in the international environment: the degree of
iteration, the discount rate, and the number of actors are viewed as being
set by the objective character of the international situation at hand. All
of these factors are influenced by domestic forces. As the Cooperation
under Anarchy volume notes, the strategies of states and the perceptions
of decision makers affect these conditions; that is, they are not really
structural. For instance, the ability to play Tit-for-Tat and to recognize
the other state's moves depends on internal factors. As Lipson maintains
in discussing game theory:
Our analysis . . . presumes that the states are coherent, unitary, rational
actors. This strong assumption is, of course, descriptively inaccurate. Gov-
ernments do not choose between alternative tactics, as a single decision-
maker might, to maximize expected returns or to assure some minimum
payoff. Rather, such choices are typically the product of politically medi-
ated coalition bargaining . . . the process of building and sustaining do-
mestic coalitions necessarily limits the capacity of modern states to devise
and execute sophisticated strategies, which may require plausible threats
to change policy sharply or to stick to one relentlessly.49
Governments may be unable to play Tit-for-Tat. They may be unable to
interpret accurately the moves of other states. Misperceptions, bureau-
cratic politics, and vested interests may systematically interfere to under-
mine—even to reverse—the hypotheses posited. When domestic factors
are introduced into the argument, not only may the predicted effects of
reciprocity, iteration, and numbers of actors fail to materialize, but the
very opposite effects may manifest themselves.
In addition, the constraints that make states more vulnerable, which
Grieco mentions and Powell focuses on explicitly, may reflect domestic
politics. Powell, for example, argues that the cost of using force is a struc-
tural variable. But this is debatable. These costs depend a great deal on
decision makers' perceptions, the ability of the state to extract resources
from domestic society, and the degree of public support for using force.
Domestic factors may thus shape a state's sense of vulnerability as much
as or more than systemic factors.
Finally, one area not considered by the literature examined here is the
problem of ratifying cooperative agreements domestically. While this is
49
Lipson (fn. 1), 10. Oye (fn. 2) also points this out (pp. 15-16).
part of the problem of pursuing strategies of reciprocity, it is also

broader. States may devise internationally cooperative solutions and
overcome cheating and relative gains concerns, only to find that their
domestic situations will not support them. Cooperation may be unattain-
able because of domestic intransigence, and not because of the interna-
tional system. This explanation applies to an important number of cases.
The failures of the International Trade Organization, the Anglo-Amer-
ican oil agreement, the European Defense Community, the European
monetary coordination in the 1970s, and the current Uruguay Round of
the GATT are attributable less to concerns over cheating or relative gains
than to the opposition of domestic actors. The domestic explanations for
other cases, such as the U.S. failure to ratify the League of Nations and
SALT II or the British abstention from European integration, are also ar-
guably more salient than the international ones. It is therefore difficult,
if not impossible, to explain any of these cases with reference solely to
international factors. Domestic theories of international cooperation
have, however, been few in number and weak in deductive argument.50
Consideration of domestic politics seems essential for understanding
international cooperation for three reasons. First, domestic politics tells
us how preferences are aggregated and national interests constructed.
Whether the focus is on absolute gains or relative gains, one still needs a
theory of domestic politics to determine how gains and losses are calcu-
lated. A state's calculation of the net costs or benefits of an arms control
accord or a trade liberalization agreement depends on the aggregation of
the domestic preferences of its constituents. Second, domestic politics can
help explain the strategies states adopt to realize their goals. Whether
states are able to play T-f-T, employ side-payments, or use force depends
very much on domestic factors. Strategies may be suggested by a state's
structural position, but the nature of its political system, bureaucratic
politics, the influence of special interests, and public opinion may ulti-
mately determine which strategies states can pursue internationally.
Third, the final step in establishing cooperative agreements occurs when
domestic actors agree to abide by the terms negotiated internationally.
Domestic ratification is thus essential. Policymakers know this, and
hence when negotiating internationally they must always anticipate do-
mestic reactions. International agreements can always be reached, but
they can only be implemented if key domestic actors concur. For these
three reasons, domestic politics are essential to understanding interna-
tional cooperation.
50
One of the best recent attempts is Robert Putnam, "Diplomacy and Domestic Politics,"
International Organization 42 (Summer 1988).
494 WORLD POLITICS
No single theory of domestic politics exists today to explain interna-

tional cooperation. Rather, there are four prominent theories, each of
which highlights different factors. These theories will be examined in
terms of the three variables emphasized above: how national interests
are constructed, what international strategies can be employed, and
when domestic ratification of international agreements can occur.
First, pluralist theories suggest that the preferences of interest groups
and the dynamics of party systems should matter most. Groups or parties
that anticipate net gains from cooperative agreements will vie with those
likely to suffer losses, and the influence of these actors and their relative
access to policy-making institutions will shape the state's preferences and
bargaining abilities.51 The national interest will be the sum of the pref-
erences of different interest groups as weighted by their access to policy-
making institutions. Because these societal groups play such a central
role, they can limit the international strategies available to a state. Fur-
thermore, policymakers may depend heavily on these groups to negotiate
the agreements since their preferences will be the key to ratifying the
agreement.
Second, elite theories of politics, whether of democratic or other sys-
tems, locate the sources of cooperation in the nature of the national de-
cision makers.52 The backgrounds, beliefs, and political context of these
elites will shape international bargaining. Haas's argument is partially an
elitist one. The national interest here is shaped by the calculations of
political elites, as Haas claims for his epistemic community. Interest
group preferences matter less. States' strategies will also be a function of
these elites—that is, of their perceptions, political backgrounds, and de-
gree of unity. Indeed, it is likely that political elites will employ similar
strategies at home and abroad. Finally, in this case ratification will hinge
on gaining the acquiescence of a majority of these elites.
Third, institutional theories of the state, such as bureaucratic and or-
ganizational politics or the "new institutionalism," focus on domestic de-
cision-making structures.53 The character of domestic political institu-
tions may condition both the preferences of a state and its ability to
negotiate internationally. The national interest in this case depends on
how political institutions shape actors' preferences and condition their
51
See, e.g., Peter Gourevitch, Politics in Hard Times (Ithaca, N.Y.: Cornell University
Press, 1987); Helen Milner, Resisting Protectionism (Princeton: Princeton University Press,
1988).
52
See, e.g., John Odell, U.S. International Monetary Policy (Princeton: Princeton University
Press, 1982).
53
See, e.g., G. John Ikenberry, ed., The State in American Foreign Economic Policy (Ithaca,
N.Y.: Cornell University Press, 1990).
access to decision-making forums. Haas, for instance, points to environ-

mental elites who gained institutional access to the more established na-
tional environmental ministries, which then allowed them to reshape the
"national interest" in the Med Plan. Certain types of institutions may
also make it more feasible to play various strategies. For example, cen-
tralized systems may be better able to play Tit-for-Tat. In addition, a
focus on institutions would seem critical to understanding domestic rat-
ification. Does ratification require a formal legislative vote or a two-
thirds majority versus a simple majority? Such conditions will shape the
international negotiations as well as the domestic coalition-building pro-
cess.
Finally, Marxist theories of politics illuminate the centrality of capital-
ism and classes for cooperation.54 For Marxist theories—whether struc-
tural or instrumental—it is the interests of capital that determine the
national interest. This could imply a long-run set of preferences stressing
the protection of capitalist accumulation or a shorter-run set of interests
based on the preferences of particular capitalists. The national interest
will nevertheless weight the demands of capitalist producers more
heavily than those of other groups. The state's international strategic op-
tions are therefore either very limited due to the veto of capitalists or
quite extensive if the state is structurally autonomous. Marxist theories
hold, too, that domestic ratification hinges on the preferences of capital,
but on this point the theories are also ambiguous. Domestic capital may
desire international cooperation and pursue it through cross-national al-
liances and cartels. Or national capital of different states may battle each
other for foreign markets, creating Lenin's imperialist war.
Much as different theories of international politics identify different
variables as being central to cooperation, so do these four domestic the-
ories. One can judge their relative merits only when specific hypotheses
have been deduced from them and tested against the evidence, as the
systemic-level theories examined here have begun to do.
CONCLUSION
With the end of the post-World War II international order, the need to
devise new cooperative arrangements among nations has become essen-
tial. While cooperation may not always be beneficial depending on the
issue and one's vantage point, attempts by states to reduce the negative
effects of their policies on one another can improve the general welfare.
54
See, e.g., Fred Block, The Origins of International Economic Disorder (Berkeley: Univer-
sity of California Press, 1977).
496 WORLD POLITICS
The literature reviewed here tries to identify the systemic conditions un-
der which collaborative activity may be promoted. Scholars have devel-
oped a common understanding of cooperation and a number of powerful
systemic hypotheses to explain cooperation. These hypotheses remain
problematic and tentative. They suggest that conditions that allow actors
to interact in an iterated fashion using strategies of reciprocity may be
conducive to cooperation. Achieving a "balanced" distribution of gains
in negotiations may also prove crucial to reaching agreement. The exis-
tence of international regimes today in certain issue-areas may foster co-
operation in other areas. Communities of transnational actors who share
beliefs and epistemologies may also promote collaborative agreements.
Finally, issues involving actors with different levels of capabilities may
prove more amenable to cooperative agreement. Sorting out the different
effects of these variables in practice is likely to be very difficult. For in-
stance, in an area where a regime exists, iteration is extensive, and reci-
procity is practiced (as in the GATT trade negotiations), how important are
the problems of large numbers of actors and declining levels of asym-
metry among them? The complex interaction of these variables in inter-
national politics makes it difficult to assess the conditions that promote
cooperation.
The literature also has at least two weaknesses. First, in striving to
build systemic theories, the authors begin with the assumption of anar-
chy and then add on a host of other assumptions that, it is implied, flow
from the fact of anarchy. In reality though, these assumptions seem to
depend on other factors, some domestic and some international. For ex-
ample, anarchy does not determine whether relative or absolute gains
dominate the motivations of states. Rather, that depends on the domestic
character of states and other features of the issue-area. Second, the liter-
ature suffers from a systematic neglect of domestic factors—even while
it depends on implicit theories about internal politics. Each state's pay-
offs, its perceptions of "balance," its time horizon and expectations about
the future, and its capacity to employ strategies to modify the game are
heavily conditioned by its domestic situation. Thus, for all that systemic
theory has been touted for its supposed epistemological priority or inher-
ent parsimony, the biggest gains in understanding international cooper-
ation in the future are likely to come from domestic-level theories.

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International Theories of Cooperation Among

World Politics / Volume 44 / Issue 03 / April 1992, pp 466 - 496

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Joseph Grieco. Cooperation among Nations. Ithaca, N.Y.: Cornell University

C OOPERATION among nations has become the focus of a wide

World Politics 44 (April 1992), 466-96

During the past decade much of the international relations literature

THE STRENGTHS: A DEFINITION AND SOME HYPOTHESES

A notable feature of the recent literature on international cooperation is

First, it assumes that each actor's behavior is directed toward some

at a common definition of cooperation is an important first step, then,

The notion of cooperation imposed by a stronger player may seem anom-

ABSOLUTE GAINS, RELATIVE GAINS, AND RECIPROCITY HYPOTHESES

complicated (and realistic) social interactions, the notion of reciprocity is

the exchange. Balanced exchange, then, is central to explaining cooper-

side-payments appears to be at the core of cooperative endeavors both

NUMBER OF ACTORS HYPOTHESIS

ments in social psychology have examined the impact of different dis-

INTERNATIONAL REGIMES HYPOTHESIS

A fourth hypothesis advanced to explain cooperation centers on the role

EPISTEMIC COMMUNITY HYPOTHESIS

A fifth hypothesis in the recent international relations literature deals

and no to the second: whereas initial agreements may be explained by

POWER ASYMMETRIES HYPOTHESIS

A final hypothesis implicit in some of the recent literature suggests that

T H E WEAKNESSES: ASSUMPTIONS ABOUT INTERNATIONAL POLITICS

The recent literature on cooperation suffers from at least two serious

Driven by an interest in survival and independence, states are acutely sen-

W h i l e G r i e c o is concerned w i t h b o t h absolute a n d relative gains, h e

A state's sensitivity coefficient to gaps in gains may vary according to its

C o n c e r n for relative gains should be a variable, b u t G r i e c o t e n d s to e m -

T h e r e f o r e , the addition of either issues or actors, or b o t h , reduces t h e

While these points mitigate the pessimism of Grieco's argument by

The final step in Grieco's argument deserves scrutiny as well. Even

surrounds an issue, decision makers are willing to give new scientific

The determination of preference rankings need not pose a problem

introductory remarks declaiming systemic theories slip into inductive

French case shows, how bureaucratic interests are aggregated in policy-

part of the problem of pursuing strategies of reciprocity, it is also

No single theory of domestic politics exists today to explain interna-

access to decision-making forums. Haas, for instance, points to environ-

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