In the aftermath of a sovereign default, debt recovery is determined through a restructuring process. Empirically, we show that the level of recovery is positively related to the level of defaulted debt. To rationalize this strong association, we build a framework that employs the Kalai-Smorodinsky bargaining solution in a model of sovereign debt renegotiation while jointly matching standard emerging market behavior. We identify the key assumptions that enable the model to match the data. We also show that the model using a standard Nash bargaining protocol results in debt recovery being unrelated to the outstanding level of debt. Two debt relief programs are then studied to highlight the difference between the two models in welfare implications.

Domestic unrest often creates problems of both shifting power and shifting preferences. We analyze a model in which a foreign state considers a “death-watch” attack against a domestic state temporarily weakened by unrest in which (1) two polarized factions compete for the power to set policy in the future and (2) the foreign state’s favored faction may support an invasion. Military success allows the foreign state to seize policy control, but defeat may hasten the rise of its disfavored faction when the favored faction links the outcomes of the two conflicts by bandwagoning with the attacker. In equilibrium, decisions to attack and bandwagon depend on the interaction of shifting power and shifting preferences. We show first that temporary weakness causes war, but only when the favored faction is unlikely to survive unrest. Second, increasing factional polarization can encourage or discourage foreign attack and local bandwagoning, conditional on how domestic preferences are shifting. Third, extensions show that (1) death-watch attacks are possible at any distribution of power; (2) the threat of attack may not be sufficient to deter domestic unrest; and (3) attack may be profitable even when alternative options of aiding a favored faction are available. We also use the model to explain why similar episodes of unrest in Ukraine prompted Russian invasion in 2014 but not 2004.

In various organizational settings, a team member is given the authority to make an investment decision that influences the value of the jointly produced surplus. We experimentally investigate the effect of asymmetric status, investment decisions, and the outcome of these decisions on bargaining behavior and outcomes. Agents’ initial contributions to the surplus are determined by their relative performances in a real-effort task. Three treatments vary in how the final surplus value is determined. We observe that when low-contributors take a risk, they are punished (rewarded) for failure (success), whereas high-contributors receive a fixed share independent of the outcome. Analysis of bargaining process variables, subjects’ communication during bargaining, and third parties’ normative judgments provides further insights into the possible mechanism behind this observation.

This paper analyzes two ideal-type signaling interactions that are fundamental to international relations: reassurance and coercive bargaining. In reassurance, states attempt to signal that their goals are compatible in order to avoid conflict, whereas in coercive bargaining, they attempt to inflate the incompatibility of their goals in order to increase their negotiating leverage over a disputed asset. This article conceptualizes these two types of signaling interaction and delineates semi-overlapping conditions under which each obtains. It then identifies three ways in which credible signaling occurs differently in reassurance versus coercive bargaining. First, the directional effects of power shifts are reversed in each interaction, generating incentives for rising states to misrepresent in reassurance but not in bargaining. Second, whereas signals that are costless to honest, high-resolve senders are widely available in bargaining, the most prominent reassurance signals are typically costly even to honest senders with benign intentions. Third, it is often difficult to infer which issue area motivates senders’ behaviors in reassurance, whereas in bargaining senders have incentives to reveal which issues they prioritize. In combination, these distinctions suggest that reassurance is systematically more difficult than signaling high resolve.

Many legal disputes are resolved through settlement. The dominant theory explaining settlements – known as “bargaining in the shadow of the law” – assumes that litigants are informed, rational actors inclined to bargain toward a settlement prior to court proceedings. Yet many settlements are negotiated after litigants have appeared in court expecting to go to trial. This article argues that court organizational mechanisms play an undertheorized role in facilitating settlement agreements. To build theory on organizational mechanisms, we examine the case of eviction settlements. Drawing on ethnographic observations and interviews in a California eviction court, we find that organizational rules and workgroup norms funnel mostly unrepresented tenants – sometimes, in coercive ways – into unregulated hallway conversations with landlord attorneys and/or participation in the court’s mediation program. Through relational interactions with legal professionals in these organizational spaces, tenants are taught the risks of trial and the benefits of settlement. As a result, most tenants in our sample come to recognize their legal culpability and view settlement agreements as legitimate, even as their negotiated settlements reproduce their housing insecurity. We discuss implications for bargaining theory and research on housing insecurity.

This article develops a novel approach for studying the influence of supranational institutions in international cooperation. While earlier research tends to treat member states as a collective yielding influence on supranational institutions, we unpack this collective to explore differentiated supranational influence. To this end, the article makes three contributions. First, it develops a method for measuring differentiated supranational influence that makes it possible to identify which member states give ground when a supranational institution is influential. Second, it theorizes the sources of differentiated supranational influence, arguing that states are more likely to accommodate a supranational institution when they are more dependent on the resources of this institution. Third, it illustrates the usefulness of this approach empirically through an analysis of the influence of the European Commission in European Union bargaining. The analysis suggests that our approach can measure and explain differentiated supranational influence under conditions of both heightened crisis and everyday politics.

A large literature examines the composition of cabinets in parliamentary systems, but very little attention has been paid to the size of those cabinets. Yet not only is the size of the cabinet related to the division of portfolios that may take place, cabinet size is also related to policy outcomes. In this article, a theory of party size is considered which examines how coalition bargaining considerations, intra‐party politics and efficiency concerns affect the size of cabinets. Hypotheses derived from the theory are examined using an extensive cross‐national dataset on coalition governments which allows us to track changes in cabinet size and membership both across and within cabinets.

This article argues that process tracing is a viable and suitable methodological alternative to probe the implications of formal models specifying how the dynamics of belief formation may systematically cause bargaining failures under uncertainty. I illustrate the argument with a brief case study of the failure of the European Defence Community in postwar Europe.

Many countries have implemented a variety of pension reforms in response to the challenges posed by an aging population. These reforms typically involve a trade-off between ‘refinancing’ (i.e., increasing contributions) and ‘retrenchment’ (i.e., reducing benefits). The primary question addressed in this study is whether policymakers in the European Union (EU) possess the necessary capacity to sustain legislated pension reforms, particularly given the growing political influence of the elderly. To examine this issue, we develop a bargaining model designed to optimally allocate the economic burden of aging between successive cohorts of workers and retirees, incorporating retirement incentives. In a scenario where bargaining power remains constant, the optimal allocation rule dictates a fixed-contribution system, effectively shifting the full burden of aging onto the elderly. However, when bargaining power is allowed to fluctuate in response to changes in the relative size of the retiree population (i.e., the dependency rate), the optimal allocation rule involves a compromise between increasing contributions and reducing benefits. In the empirical analysis, we compare these theoretical optimal allocation rules with projections of pension benefit rates and dependency ratios from the 2021 Economic Policy Committee. By calculating the implicit bargaining power required to align projected pension benefits with the optimal sharing rule for each year, we demonstrate a growing divergence between projected pension benefits and the optimal levels in many EU countries, as demographic shifts progress. Furthermore, our findings indicate that for most countries, projected pension benefits are increasingly falling below optimal levels when bargaining power adjusts in accordance with population aging.