The Invisible Fist: How Potential Power Coerces Concessions
Abstract: Conventional wisdom claims that states proliferate when nuclear weapons’ coercive power outweighs their associated costs and risk of war. We show that the literature critically overlooks the role of bargaining in deterring nuclear acquisition; even when conditions appear ripe for proliferation, declining states can buy off rising states and avoid the inefficiency of nuclear development. To that end, we construct an infinite horizon bargaining model and demonstrate that such butter-for-bombs agreements are sustainable in the long term, even if rising states are free to unilaterally break those agreements and proliferate. We then apply the findings to the United States’ ongoing negotiations with Iran over the latter’s nuclear program.
Research Note: What Is Power? Interpreting p in Crisis Bargaining
Abstract: When two states fight a war in the standard crisis bargaining model, one prevails with probability p, the other prevails with complementary probability, and the winner receives the entire bargaining good. In this research note, we show that $p$ is better understood as the average outcome of war. Such an interpretation does not change existing formal results but provides superior intuition without making strict assumptions about what “war” is. We then apply the concept to show how nuclear weapons can affect the bargaining range even if it is common knowledge that they will not be used in a war.
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The Fear of Injury: Explaining Delay in Contract Extensions
Abstract: Why do we observe delay when sports teams and their players attempt to negotiate contract extensions? We show that players’ various levels of risk aversion and the team’s uncertainty can cause it. Every time a player takes the field, he risks catastrophic injury which will deny him a large contract in free agency. In a game theoretical model of this bargaining problem the team begins making offers only the most risk averse players would except. Over the course of a season, more risk acceptant players credibly demonstrate their preferences by rejecting offers and risking injury during games. The team then rewards them with larger offers. From a managerial perspective, this model shows that teams should not cut-off negotiations during the season and that risk aversion is an important latent attribution to constructing an affordable team.
To Bunt or Not to Bunt: Optimal Batting Strategy During a No-Hitter
Abstract: When a pitcher carries a no hitter into late innings, there is a social norm against bunting for a base hit. Conventional wisdom treats this as a tradeoff for the batter, as though never bunting decreases his team’s probability of victory. Using a game theoretical model of the interaction, I show that this is not the case when the defense and the batter are playing optimally. Specifically, even if a batter solely wants to maximize his team’s chances of winning, the batter never bunts in a subgame perfect equilibrium for most parameters. However, this equilibrium requires the fielder to understand that such a batter does not unconditionally respect the social norm. As such, batters might break the norm because fielders abuse the norm by playing further back than they otherwise would.
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Breaking Balls with a Runner on Third: A Game Theoretical Analysis of Optimal Behavior
Abstract: Whenever a pitcher throws a breaking ball with a runner on third base, he risks having the ball go past the catcher and allowing the runner to score. In this article, I analyze optimal behavior of such scenario. With decent control and competent catchers, the pitcher throws breaking balls at the normal rate in equilibrium. Meanwhile, the batter displays risk adversity by anticipating fastballs more frequently but does not record hits more frequently with a runner on third.