Notes on bargaining

1. What is bargaining

2. Bargaining power

3. Issue of communication

Conflict and bargaining• In conflict situations:

– Pure conflict: zero-sum game– Pure cooperation: common goals and interests: a coordination game– Most cases: mixed actors want to coordinate but over different

outcomes: thus, both of a bargaining and coordination game• Actors are willing to coordinate• Actors prefer different outcomes• Thus, actors need to bargain over the distribution of costs and benefits

– Bargaining is the process through which actors coordinate their positions or expectations over possible outcomes

• Transferring of information• Signalling commitment• e.g. rules of an IGO; agreement over the outcome of a civil war

– Bargaining theory: explains how rational actors try to influence each other’s expectations (and positions) to resolve a conflict.

Bargaining power

• Bargaining power: the ability of a rational actor to influence other actors to modify their expectations and positions.

• Elements of bargaining power:– It is relative not absolute (e.g. depends on the issue

area that is negotiated)– It should be strategic

• Brute force is not always an option; bargaining power is based on potential use of power rather than its application

– Commitment• Use of threats and promises to affect other actors• Threats and promises must be credible• Showing commitment is a way to signal credibility

A few bargaining tips to consider

• An effective threat is one that hurts you more than the opponent (e.g. burning bridges, ships, etc.): signalling commitment

• Sometimes fewer options can be a strategic advantage: reduce freedom of action

• Sometimes it is better to relinquish initiative: e.g. US blockade in Cuban Missile Crisis.

Communicating incentives and commitment

• Signalling intentions– Audience costs

• Domestic and international

– For signalling to work it must be costly, cheap talk does not work in bargaining.

• Types of bargaining given the nature of communication

• explicit (actors communicate with words)– Official and unofficial diplomacy (track one and two

respectively)

• tacit (actors communicate through actions)– E.g. prior behaviour, audience costs