Related Literature

Why do rational states fight each other despite their incentives for peaceful settlements that would avoid the costs of war? Fearon (Reference Fearon1995) highlighted two rationalist explanations: private information with the incentive to misrepresent makes it harder for states to locate a mutually acceptable deal, whereas commitment problems prevent two sides from striking a peaceful bargain in the present when one side has an incentive to renege in the future. These two explanations for war are believed to be “the full set of rationalist explanations that are both theoretically coherent and empirically plausible” (Fearon Reference Fearon1995, 380).Footnote ¹ Since Fearon (Reference Fearon1995), various formal models in international relations (IR) have incorporated and extended the implications of private information and commitment problems on war (e.g., Powell Reference Powell1999; Wagner Reference Wagner2000; Filson and Werner Reference Filson and Werner2002; Kydd Reference Kydd2003; Slantchev Reference Slantchev2003; Smith and Stam Reference Smith and Stam2004; Powell Reference Powell2006; Leventoglu and Slantchev Reference Leventoglu and Slantchev2007). Both explanations are also prominent in the wider literature on conflict and cooperation in political science and economics.Footnote ² In particular, the commitment problem appears to be pivotal in a vast variety of political phenomena, ranging from regime change and civil wars to international economic relations and the protection of human rights (e.g., Greif, Milgrom and Weingast Reference Greif, Milgrom and Weingast1994; Broz Reference Broz2002; Walter Reference Walter2002; Fearon Reference Fearon2004; Acemoglu and Robinson Reference Acemoglu and Robinson2006; Jeanne Reference Jeanne2009; Simmons Reference Simmons2009).

This study is the first to jointly evaluate Fearon’s (Reference Fearon1995) twin rationalist explanations in the laboratory. I focus on these two mechanisms as they are the most prominent in the rationalist literature on war, as well as the most well understood. The existing literature, however, offers no empirical guidance on what might happen when the two mechanisms interact: do these mechanisms mutually reinforce each other in reality? Is the effect of the commitment problem sharpened in the existence of private information—or does it not matter empirically? Using a 2×2 experimental design, I explore whether the commitment problem influences the risk of conflict in different information environments. It is useful to test the commitment-problem treatment in an idealized world of perfect information, but it is also practically relevant to understand whether and how the treatment operates in a setting with private information, which better approximates the world we live in. The 2×2 factorial design balances both considerations by testing the treatment separately under both information conditions. With the same design, we can also test whether private information has a significant effect on conflict with and without a commitment problem.

In IR, three recent game-theoretic experiments preceded this study. On the information side, Butler, Bellman and Kichiyev (Reference Butler, Bellman and Kichiyev2007) examined whether a status-quo-advantaged actor can achieve a better bargain under different information conditions, and found that the advantaged actor gets more when there is private information. Tingley and Wang (Reference Tingley and Wang2010) experimentally manipulated the cost of backing down to study how players with incomplete information update their beliefs in a crisis bargaining game. These studies, while related, did not investigate the private-information mechanism proposed in Fearon (Reference Fearon1995). On the commitment side, Tingley (Reference Tingley2011) compared bargaining behavior at two different probabilities of repeated interaction (δ), and insightfully showed how bargaining might differ when the shadow of the future is high (δ=0.7) or low (δ=0.3). Given its specific research focus, however, the subjects’ perception of a commitment problem is not fully eliminated. A subject can perceive a potential commitment problem in both experimental conditions, albeit at two different probabilities (0.3 or 0.7), as a positive probability of repeated interaction exists in both groups.

I construct the treatment condition under which players confront the commitment problem with certainty. For the control group, the key challenge is to shut down the commitment problem but keep the shadow of shifting power the same as in the treatment group. This is achieved through the removal of the proposer’s ability to change its first-period promise in the second period, which constructs a perfect-enforcement device that eliminates all possibilities of reneging.

In economics, the most relevant studies involve bargaining experiments such as the ultimatum-game experiment (e.g., Roth et al. Reference Roth, Prasnikar, Okuno-Fujiwara and Zamir1991; Cameron Reference Cameron1999; Costa-Gomes and Zauner Reference Costa-Gomes and Zauner2001). There is a sizeable literature on the effects of information asymmetry on bargaining. In general, there are more bargaining breakdowns when information is asymmetric, but the support for particular equilibrium predictions is sometimes weak (see Forsythe, Kennan and Sopher Reference Forsythe, Kennan and Sopher1991). The significance of asymmetric information appears to depend on the particularities of the information environment and the specific form of interaction. The experiments here focus specifically on private information on the cost of war in the shadow of shifting power.Footnote ³

In contrast, there are few experiments that focus on the commitment problem in bargaining games. The closest strands of literature in experimental economics are three. The first consists of experiments that focus on the communication of commitment, particularly the making of a promise and its generally positive effect on cooperation (e.g., Ellingsen and Johannesson Reference Ellingsen and Johannesson2004; Charness and Dufwenberg Reference Charness and Dufwenberg2006; Vanberg Reference Vanberg2008). These experiments are mostly silent on the commitment problem. The second strand focuses on experimental manipulations of the “shadow of the future” (e.g., Dal Bó Reference Dal Bó2005; Duffy and Ochs Reference Duffy and Ochs2009; Tingley Reference Tingley2011). These manipulations can induce a commitment problem, although different in nature from that created by non-enforcement in the shadow of shifting power.Footnote ⁴ The third strand of literature involves experimental manipulations of bargaining power, which involve variations in the payoffs for conflict between players that translate to variations in their bargaining strength (Binmore et al. Reference Binmore, Morgan, Snaked and Sutton1991; Fischer, Güth and Pull Reference Fischer, Güth and Pull2007; Anbarci and Feltovich Reference Anbarci and Feltovich2011). Although my experiments also involve variations in bargaining power, I focus on commitment elicitation, enforcement conditions and intertemporal power shifts, which are not emphasized in this literature.

I focus on a commitment problem in the shadow of shifting power, which scholars believe to be a potent cause of many wars in history (see Vagts Reference Vagts1956, Ch. 8; Powell Reference Powell1999; Van Evera Reference Van Evera1999, Ch. 4; Powell Reference Powell2006). To my knowledge, there is no preceding work in experimental economics or political science that eliminates the perception of a commitment problem under shifting power to isolate its causal effect, nor is there any existing study that combines and jointly evaluates Fearon’s (Reference Fearon1995) twin explanations experimentally. This study attempts to fill these gaps in the literature.

The strengths and limitations of experiments with regard to internal and external validity are well rehearsed in political science. Appendix 1 summarizes and evaluates the debate in the context of IR experiments.

Model Predictions

I combine the information problem and the commitment problem in a joint model by integrating Fearon’s (Reference Fearon1995) models.Footnote ⁵ The goal is to facilitate experimental testing based on the simplest possible model that combines both the information problem and the commitment problem under one structure. The results and intuitions of the joint model are similar to those in Fearon’s (Reference Fearon1995) separate models.

The joint model has three key features. First, it combines the information and commitment problems in a two-period model, instead of a single-period model for the information problem and an infinite-period model for the commitment problem, as in Fearon’s work. A two-period model offers the simplest possible structure that generates the commitment problem, but avoids the practical difficulties of implementing infinite-period bargaining with human subjects. The second feature is the use of “perfect enforcement.” The enforcement condition is defined such that Player A cannot make any change to its Stage 1 demand in Stage 2. Hence, the commitment problem is completely shut down in the enforcement condition. The use of a perfect-enforcement device eliminates any noise that might arise from the expectation of even a minuscule possibility of reneging. Third, I black box the war technology. Players end up with an absolute payoff if war is chosen, without having to deal with expected value calculations involving the probabilities of winning wars. With these changes, the experiment becomes cleaner in design as well as simpler for the players to play.

Consider a two-stage game in which two players bargain over a prize with the value v. In Stage 1, Player A makes a demand x ₁∈[0, v]. Player B observes x ₁ and decides to agree or to fight. If B fights, the game ends with payoff (w _1A−c _A, w _1B−c _B), with w _1A=w _1B, where w _1i and c _i are Player i’s war payoff in Stage 1 and cost of war, respectively. If B agrees, the game enters Stage 2 in which A confirms its demand x ₂∈[0, v]. B observes x ₂ and decides to agree or to fight. If B agrees to x ₂, the game ends with payoff (x ₂, v−x ₂). If B fights, the game ends with payoff (w _2A−c _A, w _2B−c _B), with v=w _1A+w _1B=w _2A+w _2B and w _2A>w _1A>w _2B>c. Thus, A and B have equal bargaining power in Stage 1, but the bargaining power shifts in A’s favor in Stage 2.

In the experiment, v is fixed at 10 and c _i is fixed at 2. For the war payoffs, w _1A=w _1B=5, w _2A=7 and w _2B=3. These parameter values are chosen to minimize noise in the experiment. Payoffs are set within the integer range of [0, 10] to simplify the mathematics for subjects and to reduce the likelihood of calculation error. Parameter c _i is set at 2 as it is the highest integer value by which all payoffs in the model remain in positive integer domain, given w _2A=7 and w _2B=3. The values of w _2A and w _2B are chosen to achieve equidistance from the midpoint. Note that other combinations of integer values will complicate the experiment by either breaking the equidistance or generating potential payoffs that are 0 or negative given the requirements of the model.Footnote ⁶

I analyze the incentive structures implemented in the experiment condition by condition. The formal analysis is described in Appendix 2. It yields four predictions for experimental testing:

Experimental Design

I apply a 2×2 factorial design with controlled variation in information and enforcement. The first treatment variable captures the difference in information conditions; the second captures the difference in enforcement conditions.

Experimental Sequence

Participants begin the experiment by reading the instructions on their computer screens. They are placed in the role of a decisionmaker bargaining with another country for a valuable prize worth 10 points. I frame the situation as one involving crisis bargaining and war to enhance the relevance of the experiment, as my research question deals directly with rationalist explanations for war. The war framing also helps to strengthen the inducement of utilities by reducing the potential other-regarding behavior widely documented in many bargaining experiments.Footnote ¹¹ This is important as rationalist explanations for war do not assume other-regarding behavior.

Participants are informed that they will be randomly divided into dyads. They will be randomly assigned as a decisionmaker for either Country A or B in each round, and hence their paired opponent will also change at random after every round. The two-stage bargaining game (Figure 1) is carefully explained to the subjects, with the payoff difference between Stages 1 and 2 highlighted. In Stage 1, both countries are equally powerful: if they fight a war, each country will seize 50 percent of the prize (5 points) for itself. In Stage 2, Country A becomes more powerful, and if they fight a war, A will seize 70 percent of the prize (7 points). As war is costly, each country will lose points given the cost of war. The cost of war is known to all subjects in the public-information condition, whereas subjects in the private-information condition know their own cost but not their opponent’s cost. If a peaceful bargain is reached, both sides avoid the costs of war.

Fig. 1

Crisis bargaining game

Subjects stay in the same information condition for Rounds 1–10. For the enforcement manipulation, I use a crossover design with a sudden switch in the enforcement condition in Round 6. Hence, half the subject pool plays five rounds with enforcement before switching to five rounds with no enforcement; the other half plays in the reverse sequence. The crossover design is used often in clinical trials but rarely in political science. It offers two benefits in this study: the collection of both within-subjects and between-subjects data on the enforcement variable; and a replication test of the results with a sudden exchange of treatments. Findings that survive the crossover test are more robust than those that do not.

To summarize the experimental sequence:

• ∙ Main experiment: Participants play ten rounds. They play five rounds with enforcement and five without. They stay in the same information treatment as randomly assigned in Round 1.

• ∙ Extensions: After Round 10, participants play five more rounds under the public-information condition with an option for simultaneous moves.Footnote ¹² This is an extension to test whether the effect of enforcement is generalizable and robust beyond pure sequential bargaining. After Round 15, participants play one round of the same game in the no-enforcement condition with timer treatments that induce differential time pressures (see Part 4 of Appendix 5 for details).

• ∙ End: The session ends with a risk-aversion game in the final round that measures individual risk preferences.

The full experimental instructions are reproduced in Appendix 3.

Case Study Design

A laboratory experiment allows the researcher to construct the ceteris paribus condition often assumed in a scientific theory but rarely achievable in the real world, and is thus a powerful tool for testing mechanisms. Yet, the scientific virtue of the lab also raises a reasonable concern on whether the identified effect—and the mechanism that predicts it—actually matters in the real world when a ceteris paribus setting does not exist. For instance, a mechanism may be valid but its causal effect sensitive or weak. The effect may be significant in a tightly controlled environment, but canceled out, reconditioned or interacted away by the circumstances found in a naturalistic setting. In this case, the experimental result may be theoretically validating but also practically misleading.

This concern may be addressed with field experiments (Fisher Reference Fisher1926; Campbell Reference Campbell1998; Levitt and List Reference Levitt and List2009; Gerber and Green Reference Gerber and Green2012). In international politics—where field experiments are practically and ethically difficult—a feasible alternative is to seek field verifications of the experimental results. Specifically, in identifying causes of war—a rare event that can often only be retrospectively investigated—the feasible alternative may be to study the relevant historical processes with the most reliable and high-resolution evidence that we can find. If a decision-based mechanism is being investigated, evidence on the historical decisionmaking process should be gathered, and consistency between the predicted and revealed behaviors carefully evaluated. This is the logic behind the field verification design described in this section.

In the last section, I have shown that the commitment problem increases the risks of conflict in the laboratory. To what extent does the commitment problem shape decisionmaking in a real-world crisis?Footnote ²³ I focus on three questions: (1) Does the commitment-problem logic operate in a real-world crisis triggered by an impending power shift? (2) How does the logic affect the decision process leading to war? (3) Does the case reveal important omissions in our theoretical model? Questions (1) and (2) help to direct the field verification exercise, whereas (3) extracts new information from the field verification.

I address the three questions with a case study of Japan’s deliberations on the eve of the Pacific War, which involves a sharp power shift. I analyze the meeting records from the four imperial conferences preceding the Pacific War and the 38th–74th liaison conferences between the imperial conferences (translated in Ike Reference Ike1967). Owing to space constraints, methodological considerations and case analysis are contained in Appendix 5.

The case analysis can be encapsulated in three key points.Footnote ²⁴ First, Japanese leaders did not focus on war with the United States before the latter’s imposition of a total oil embargo starting in August 1941. That focus quickly changed after the US embargo. The evidence shows a clear difference in the strategic calculations articulated at the imperial conferences before and after the embargo. In the July conference, the focus was on plans to establish the Greater East Asia Co-Prosperity Sphere and settle the war in China expeditiously, and the question of war with the Soviet Union. Japan’s belligerence did not center on the United States; the conference heard no specific plan to attack the United States; and there was no clear statement of the commitment-problem logic that would be repeatedly applied against the United States in later conferences.

Second, the oil embargo triggered Japanese perceptions that its relative power would deteriorate, and that the United States cannot credibly commit not to exploit Japan in the future. The embargo left Japan with no doubt about its impending decline as Japan depended on foreign oil imports to sustain its war machine. The reference materials for the September imperial conference emphasized: “We need not repeat that at present oil is the weak point of our Empire’s national strength and fighting power…. As time passes, our capacity to carry on war will decline, and our Empire will become powerless militarily” (Ike Reference Ike1967, 155). Stemming the relative decline was crucial, because “[e]ven if we should make concessions to the United States by giving up part of our national policy for the sake of a temporary peace, the United States, its military position strengthened, is sure to demand more and more concessions on our part; and ultimately our Empire will have to lie prostrate at the feet of the United States” (Ike Reference Ike1967, 152). Hence, the September conference was warned that “military force should be used promptly if there is no prospect of diplomatic success. It is expected that the United States and Great Britain will try to delay us with diplomatic negotiations. We must be careful not to be inveigled into this trap” (Ike Reference Ike1967, 155).

Third, the oil embargo created a strong time pressure that made Japanese leaders push for a quick decision for war. This led to a tight deadline for war and a truncated timeframe for negotiations. As Foreign Minister Togo concluded at the November imperial conference, “negotiations with the United States are very much restricted by the time element; consequently, to our regret, there is little room left for diplomatic maneuvering …. The prospects of achieving an amicable settlement in the negotiations are, to our deepest regret, dim” (Ike Reference Ike1967, 214).

Taken together, three key findings emerge from the archival evidence: (1) Japan’s decision for war involved strategic calculations that repeatedly applied the commitment-problem logic. (2) The perceived speed of shift in power influenced Japan’s calculations under the commitment problem. (3) The speed of power shift made Japan truncate the bargaining timeframe, making it more difficult to achieve a diplomatic settlement. Finding 1 demonstrates the realism of the commitment-problem explanation. Findings 2 and 3 highlight a historically important factor—the “truncation effect” arising from a rapid shift in power—that was omitted in my model and experiment.

These findings may provide a useful additional interpretation on why Japanese leaders rushed into the gamble that was Pearl Harbor. Although Findings 1–3 are closely consistent with the archival evidence, traditional historical narratives of the Pacific War often do not develop the theoretical connections explicated in these findings. Meanwhile, historical analyses of the war by IR scholars emphasize the role of shifting power (Sagan Reference Sagan1989; Van Evera Reference Van Evera1999; Trachtenberg Reference Trachtenberg2006), but they do not explicate it within the framework of the commitment problem or highlight how it was the perceived speed of shift in power that made Japan push for a tight deadline, which truncated the bargaining timeframe, which in turn dampened the prospect of a diplomatic settlement (truncation effect).

It is important to be cautious about the causal mechanism suggested by the case findings, as constraints in the historical data do not allow the truncation effect to be cleanly identified. To probe further, I replicated the mechanism in a laboratory setting to test its significance. The experiment offers suggestive evidence that the truncation effect exists. The experimental design and results are summarized under Finding 4 in Appendix 5.