ETH, STP

PIPP: Governance beyond the state

International politics differentiate themselves from state politics as the question of sovereignty is answered differently. States have internal and external sovereignty. A consequence is that they are formally equal entities. Therefore states have to coordinate horizontally and negotiate an order mostly based on the power they can display.

International politics would be similar to national politics if there was a world state with a monopoly of force, rule-making and rule enforcement. However, that is not the case.

Global Governance is contrasted with the anarchy that requires institutionalised forms of co-ordinated actions to produce collectively binding agreements. In contrast to government it is non-hierarchical.

Challenges to global governance are posed by security, welfare and freedom.

Security

The absence of a world police causes insecurity in the form of threats of violence, war, terrorism, arms races and competing alliances.

Welfare

The absence of a regulator and collective-goods-provider causes inefficiency and inequality which further causes market failure, resource depletion, protectionism and underdevelopment.

Freedom

The absence of interference (non-interference) allows oppression in the form of human right violations and autocratic rule.

Game Theoretic Analysis

Game Theory is used to analyse as it offers an analytical framework that captures interactions between independent, rational agents that maximise utility in an interdependent decision-making process.

Coordination game without distributional conflict

A game with two pareto-efficient equilibria. Both have equal utility. It is essential a communication problem that is solved by codification (institution). No bargaining takes place. A typical example would be “oncoming traffic side ” (left or right). Real world example usually involve next generation technologies with no endowment.

Coordination game with distributional conflict

Again it’s a game with two pareto-efficient equilibria. However, there is an unequal utility. There is a problem of communication and distribution. The resolving institution involve codification and distributional rules. The bargaining involves the first-mover advantage and the size of gain. A typical example is the “battle of the Sexes” where each partner prefers a different activity but wants to spend time together, so the utility of doing something together one doesn’t like is still higher than doing something alone one likes. Coordinating deep free trade agreements often take the form of this game.

Coordination game with rivalry

A game with three pareto-efficient equilibria. There is an unequal utility. The problems involve communication, distribution and reputation. Institutions provide prevention of non-cooperation. In the bargaining process there is a last-mover advantage (or brinkmanship). The game of “Chicken” (two drivers driven towards another head-on the loser deviates first) is a famous example and in the real world the euro crisis.

Dilemma game without distributional conflict

A game with two equilibria, one of which is pareto-efficient, also know Assurance Game. The problems are mistrust and uncertainty. Institutions can offer monitoring and capacity-building. There is no bargaining. The textbook example is the stag hunt by Jean-Jacque Rousseau. In the real world international infrastructure cooperation projects often run into this kind of game.

Dilemma game with distributional conflict

A game with a separation of optimal and equilibrium solutions, also know Prisoners’ Dilemma. The problems are mistrust and credibility of commitment. Institutions can offer monitoring and sanctioning. There is bargaining in the form of betrayal and non-compliance. The textbook example is the Prisoners’ Dilemma. In the real world the Tragedy of the Commons is the common appearance of the game (e.g. climate change negotiations).

Asymmetrical domination game

A game with one equilibrium and an unequal utility. The problems is a lack of incentive to cooperate due to an “upstream/downstream” situation. Institutions can offer an increase of scope. There is bargaining in the form of side payments and issue-linkage. The historical case is polluting a river upstream in one country and the downstream country having to deal with it.

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