Welcome!

I am a political scientist who studies war, nuclear proliferation, and terrorism, (mostly) using formal models. Currently, I am an assistant professor in the University of Pittsburgh’s Department of Political Science. Before that, I was a Stanton Nuclear Security Postdoctoral Fellow at Stanford’s Center for International Security and Cooperation. I received a PhD from the University of Rochester in 2015.

If you want to know more, you can check my CV page. You can also email me at williamspaniel@gmail.com.

Does Increasing the Costs of Conflict Decrease the Probability of War?

According to many popular theories of war, the answer is yes. In fact, this is the textbook relationship for standard stories about why states would do well to pursue increased trade ties, alliances, and nuclear weapons. (I am guilty here, too.)

It is easy to understand why this is the conventional wisdom. Consider the bargaining model of war. In the standard set-up, one side expects to receive p portion of the good in dispute, while the other receives 1-p. But because war is costly, both sides are willing to take less than their expected share to avoid conflict. This gives rise to the famous bargaining range:

Notice that when you increase the costs of war for both sides, the bargaining range grows bigger:

Thus, in theory, the reason that increasing the costs of conflict decreases the probability of war is because it makes the set of mutually preferable alternatives larger. In turn, it should be easier to identify one such settlement. Even if no one is being strategic, if you randomly throw a dart on the line, additional costs makes you more likely to hit the range.

Nevertheless, history often yields international crises that run counter to this logic like trade ties before World War I. Intuition based on some formalization is not the same as solving for equilibrium strategies and taking comparative statics. Further, while it is true that increasing the costs of conflict decrease the probability of war for most mechanisms, this is not a universal law.

Such is the topic of a new working paper by Iris Malone and myself. In it, we show that when one state is uncertain about its opponent’s resolve, increasing the costs of war can also increase the probability of war.

The intuition comes from the risk-return tradeoff. If I do not know what your bottom line is, I can take one of two approaches to negotiations.

First, I can make a small offer that only an unresolved type will accept. This works great for me when you are an unresolved type because I capture a large share of the stakes. But if also backfires against a resolved type—they fight, leading to inefficient costs of war.

Second, I can make a large offer that all types will accept. The benefit here is that I assuredly avoid paying the costs of war. The downside is that I am essentially leaving money on the table for the unresolved type.

Many factors determine which is the superior option—the relative likelihoods of each type, my risk propensity, and my costs of war, for example. But one under-appreciated determinant is the relative difference between the resolved type’s reservation value (the minimum it is willing to accept) and the unresolved type’s.

Consider the left side of the above figure. Here, the difference between the reservation values of the resolved and unresolved types is fairly small. Thus, if I make the risky offer that only the unresolved type is willing to accept (the underlined x), I’m only stealing slightly more if I made the safe offer that both types are willing to accept (the bar x). Gambling is not particularly attractive in this case, since I am risking my own costs of war to attempt to take a only a tiny additional amount of the pie.

Now consider the right side of the figure. Here, the difference in types is much greater. Thus, gambling looks comparatively more attractive this time around.

But note that increasing the military/opportunity costs of war has this precise effect of increasing the gap in the types’ reservation values. This is because unresolved types—by definition—view incremental increases to the military/opportunity costs of war as larger than the resolved type. As a result, increasing the costs of conflict can increase the probability of war.

What’s going on here? The core of the problem is that inflating costs simultaneously exacerbates the information problem that the proposer faces. This is because the proposer faces no uncertainty whatsoever when the types have identical reservation values. But increasing costs simultaneously increases the bandwidth of the proposer’s uncertainty. Thus, while increasing costs ought to have a pacifying effect, the countervailing increased uncertainty can sometimes predominate.

The good news for proponents of economic interdependence theory and mutually assured destruction is that this is only a short-term effect. In the long term, the probability of war eventually goes down. This is because sufficiently high costs of war makes each type willing to accept an offer of 0, at which point the proposer will offer an amount that both types assuredly accept.

The above figure illustrates this non-monotonic effect, with the x-axis representing the relative influence of the new costs of war as compared to the old. Note that this has important implications for both economic interdependence and nuclear weapons research. Just because two groups are trading with each other at record levels (say, on the eve of World War I) does not mean that the probability of war will go down. In fact, the parameters for which war occurs with positive probability may increase if the new costs are sufficiently low compared to the already existing costs.

Meanwhile, the figure also shows that nuclear weapons might not have a pacifying effect in the short-run. While the potential damage of 1000 nuclear weapons may push the effect into the guaranteed peace region on the right, the short-run effect of a handful of nuclear weapons might increase the circumstances under which war occurs. This is particularly concerning when thinking about a country like North Korea, which only has a handful of nuclear weapons currently.

As a further caveat, the increased costs only cause more war when the ratio between the receiver’s new costs and the proposer’s costs is sufficiently great compared to that same ratio of the old costs. This is because if the proposer faces massively increased costs compared to its baseline risk-return tradeoff, it is less likely to pursue the risky option even if there is a larger difference between the two types’ reservation values.

Fortunately, this caveat gives a nice comparative static to work with. In the paper, we investigate relations between India and China from 1949 up through the start of the 1962 Sino-Indian War. Interestingly, we show that military tensions boiled over just as trade technologies were increasing their costs for fighting; cooler heads prevailed once again in the 1980s and beyond as potential trade grew to unprecedented levels. Uncertainty over resolve played a big role here, with Indian leadership (falsely) believing that China would back down rather than risk disrupting their trade relationship. We further identify that the critical ratio discussed above held—that is, the lost trade—evenly impacted the two countries, while the status quo costs of war were much smaller for China due to their massive (10:1 in personnel alone!) military advantage.

Again, you can view the paper here. Please send me an email if you have some comments!

Abstract. International relations bargaining theory predicts that increasing the costs of war makes conflict less likely, but some crises emerge after the potential costs of conflict have increased. Why? We show that a non-monotonic relationship exists between the costs of conflict and the probability of war when there is uncertainty about resolve. Under these conditions, increasing the costs of an uninformed party’s opponent has a second-order effect of exacerbating informational asymmetries. We derive precise conditions under which fighting can occur more frequently and empirically showcase the model’s implications through a case study of Sino-Indian relations from 1949 to 2007. As the model predicts, we show that the 1962 Sino-Indian war occurred after a major trade agreement went into effect because uncertainty over Chinese resolve led India to issue aggressive screening offers over a border dispute and gamble on the risk of conflict.

Why Appoint Someone More Extreme than You?

From Appointing Extremists, by Michael Bailey and Matthew Spitzer:

Given their long tenure and broad powers, Supreme Court Justices are among the most powerful actors in American politics. The nomination process is hard to predict and nominee characteristics are often chalked up to idiosyncratic features of each appointment. In this paper, we present a nomination and confirmation game that highlights…important features of the nomination process that have received little emphasis in the formal literature . . . . [U]ncertainty about justice preferences can lead a President to prefer a nominee with preferences more extreme than his preferences.

Wait, what? WHAT!? That cannot possibly be right. Someone with your ideal point can always mimic what you would want them to do. An extremist, on the other hand, might try to impose a policy further away from your optimal outcome.

But Bailey and Spitzer will have you convinced within a few pages. I will try to get the logic down to two pictures, inspired by the figures from their paper. Imagine the Supreme Court consists of just three justices. One has retired, leaving two justices with ideal points J_1 and J_2. You are the president, and you have ideal point P with standard single-peaked preferences. You can pick a nominee with any expected ideological positioning. Call that position N. Due to uncertainty, though, the actual realization of that justice’s ideal point is distributed uniformly on the interval [N – u, N + u]. Also, let’s pretend that the Senate doesn’t exist, because a potential veto is completely irrelevant to the point.

Here are two options. First, you could nominate someone on top of his ideal point in expectation:

n

Or you could nominate someone further to the right in expectation:

nprime

The first one is always better, right? After all, the nominee will be a lot closer to you on average.

Not so fast. Think about the logic of the median voter. If you nominate the more extreme justice (N’), you guarantee that J_2 will be the median voter on all future cases. If you nominate the justice you expect to match your ideological position, you will often get J_2 as the median voter. But sometimes your nominee will actually fall to the left of J_2. And when that’s the case, your nominee becomes the median voter at a position less attractive than J_2. Thus, to hedge against this circumstance, you should nominate a justice who is more extreme (on average) than you are. Very nice!

Obviously, this was a simple example. Nevertheless, the incentive to nominate someone more extreme still influences the president under a wide variety of circumstances, whether he has a Senate to contend with or he has to worry about future nominations. Bailey and Spitzer cover a lot of these concerns toward the end of their manuscript.

I like this paper a lot. Part of why it appeals to me is that they relax the assumption that ideal points are common knowledge. This is certainly a useful assumption to make for a lot of models. For whatever reason, though, both the American politics and IR literatures have almost made this certainty axiomatic. Some of my recent work—on judicial nominees with Maya Sen and crisis bargaining (parts one and two) with Peter Bils—has relaxed this and found interesting results. Adding Bailey and Spitzer to the mix, it appears that there might be a lot of room to grow here.

Does Having More Competing Groups Imply More Political Violence?

According to the theory of outbidding, violent non-state actors have incentive to “advertise” their “services” through violence to capture a larger share of their audience’s support and resources. A natural conclusion drawn from this is that violence increases as the number of groups increases; the greater competition forces these groups to work harder to gain traction in their communities.

While this literature is large and growing, empirical support for a connection between violence and the number of competing groups is mixed. Some large-n studies find that violence positively correlates with the number of groups. Some don’t. What explains this discrepancy?

In a new working paper, I argue that a countervailing deterrence effect helps make sense of the mixed results. At present, outbidding theory only focuses on the competition between groups; it ignores the actions of the target of the violence. Nevertheless, the demands that a target imposes on an affected population influence recruitment rates, and groups have greater incentive to invest in competition when there is a larger pool of money to compete for. Thus, if a target observes a large number of groups and fears that competition will lead to massive violence, it may wish to withdraw from the problem area. This quashes the supply of recruits and reduces competition. In turn, a large number of groups can have a deterrent effect and possibly lead to less violence.

However, it is unclear whether the deterrent effect or the competition effect predominates, so I model the interaction to look for answers. As it turns out, whether more groups implies more violence depends on a seemingly irrelevant characteristic: the function that maps encroachments from the target to civilian support for resistance groups.

Naturally, this function should be increasing. That is, the more the target reduces civil liberties, captures additional territory, or expands its military into foreign lands, the more the effected population would want to support organized resistance. But the rate at which it increases could vary from case to case. Do the initial encroachments lead to a sharp increases in volunteer rates that slowly taper off? Then the function is concave, like the red line in the figure below. Or do initial encroachments lead to marginal increases at first but larger increases at later demands? Then the function is convex, like the black line in the figure.

concavity

Surprisingly, the anticipated relationship between violence and the number of groups only holds when the function is convex (black line). The intuition is exactly as the current literature understands outbidding, so I will not explain it any further.

The anticipated effect disappears when the function is concave (red line), though. The explanation is a bit more involved but makes perfect sense in retrospect. Imagine for the moment that the target state wanted to capture a small portion of the good under these concave conditions. This is going to spark a sharp marginal increase in the amount of violence it faces. Thus, if it is worth taking the first bit (and suffering a lot of violence), it is worth taking the entire policy under dispute (and suffering only marginally more violence as a result).

So when the function is concave, the target’s optimization problem is a simple binary choice between taking nothing and taking everything. But recall that violence is increasing in the number of groups. Consequently, with more groups, taking the whole lot looks less attractive. In turn, when the number of groups is low enough, the target takes everything; when that number is high enough, it takes nothing.

Observed violence as a function of the number of competing organizations. The red dots track violence when the function is concave, with black for convex.

Observed violence as a function of the number of competing organizations. The red dots track violence when the function is concave, with black for convex.

As the above figure illustrates, this leads to a nonmonotonic relationship between the number of groups and violence. Below that critical number of groups, violence increases as the number of groups increases. This is because the target is still taking the entire policy under dispute and the additional competition is producing increasingly more violence. But after that critical number, violence drops off because there is no civilian support for the groups to compete for.

The remainder of the paper discusses the empirical implications of the model. The key takeaway here is that we need some way to measure these supply curves to obtain useful large-n estimates of the effect of the number of groups. There is no simple fix here, though foreign interventions are seemingly more likely to fit the concave (red) case.

Again, the paper is here. If you have any comments, please send me an email!

Abstract. The theory of outbidding states that terrorist, insurgent, and rebel groups use violence to capture a greater share of their audience’s resources. I argue that opponents of these groups should endogenously anticipate this dynamic, which potentially alters their aims. Although a seemingly obvious implication of outbidding is that violence increases as the number of groups (and thus competition) increases, I show that this may or may not hold once we factor in the opponent’s decision. This is because the target states—fearing group competition—might endogenously reduce their demands. The results help explain empirical inconsistencies regarding outbidding. Using comparative statics from the model, I then discuss the challenges to making valid inferences regarding outbidding.

The Power Shift Myth: Understanding Preventive War

Shifting power is often cited as an explanation for war. But the causal mechanism isn’t so straightforward.

While the concept of preventive war dates back to Thucydides’ and The History of the Peloponnesian War, the modern understanding is just barely in its third decade. In Rationalist Explanations for War, James Fearon conclusively shows that bargained settlements exist that leave both parties better off than had they fought. The puzzle of war is why wars occur despite this inefficiency.

One of Fearon’s answers is that power may shift over time. Although a rising state and a declining state may reach an efficient bargain in the future, the declining state may be better off securing a costly but advantageous outcome through war today. As much as the rising state might protest, it cannot credibly commit to maintaining the status quo distribution of benefits. Rather, it will eventually want to exploit its new found power by shifting the benefits in its favor.

This idea has taken off in international relations literature. It is now the textbook explanation of preventive war. (See Frieden, Lake, and Schultz, Kydd, or myself.) It also has obvious empirical implications—growing power implies more war—which many quantitative scholars have explored. (See Bell and Johnson, Schub, and Fuhrmann and Kreps for recent examples.) The literature is growing, and knowledge is accumulating. These are great things to see.

A Hidden Assumption
Unfortunately, the causal mechanism behind preventive war isn’t entirely clear, and the notion that power shifts alone cause war is a bit of a myth. One hidden assumption in the simple preventive war construction is that power growth is exogenous. That is, the rising state does not choose whether to grow or how. It simply does, as though power grows on trees.

Yet, in practice, most power shifts are endogenous. Raising an army, building new aircraft carriers, investing in missile defense, and designing nuclear weapons all require active decisions by the state. The basic model ignores this part of the process and instead jumps to the strategic tradeoffs once the state has decided how to shift power.

Thus, a natural question to ask is how endogenous power shifts impact the probability of war. Thomas Chadefaux addresses this in his aptly-titled Bargaining over Power article. Perhaps surprisingly, the war result reverses completely—in any instance that a preventive war would have been fought, bargaining over power leads to a peaceful outcome.

The intuition is straightforward once you work through the mathematical logic. A rising state really wants to avoid war today because fighting would take place on terms most disadvantageous to it. Thus, if it had to choose between undertaking a power shift that would induce preventive war and a smaller power shift that the declining state would acquiesce to, it would choose the latter. After all, a smaller (but realized) power shift is preferable to a costly war.

The New Puzzle
Of course, Chadefaux’s results only take us further down the rabbit hole. There is ample historical evidence to tell us that states fight wars to forestall shifts in power. What then actually causes preventive war?

The literature provides a variety of answers, which I will now attempt to synthesize. First, some power shifts may actually be exogenous. If demographic trends are at the root of a power shift, countries may be unable to effectively limit their future power. In civil conflicts, protesters may be unable resolve coordination problems in the near future, leading to dramatic shifts in power over a short period of time. This helps explain why autocratic regimes exert such great effort in controlling their citizens’ movements.

Fearon recognized that the commitment problem disappears when states can bargain over power. But when the object of value also confers military advantages, bargaining can break down when there are indivisibilities in the good. Chadefaux also showed that having distinct discount factors can lead to conflict even without those indivisibilities.

Implementing such an agreement may create other bargaining problems, too. Debs and Monteiro investigate a model with costly power shifts that declining states cannot effectively monitor. Declining states sometimes need to initiate wars so as to deter weapons construction they might not otherwise observe. My research looks to see whether offering concessions-for-weapons can resolve these issues. Fortunately, the answer is yes. However, in the book manuscript I am working on, such deals fail when there is uncertainty over the declining state’s willingness to intervene.

Undoubtedly, there are many more answers to why states fight preventive wars even when power shifts are endogenous. Sadly, though, this literature feels somewhat stifled given that new research often constructs models with exogenous power shifts without any justification for why states cannot negotiate over power.

Empirical Implications
I conclude by discussing some implications of endogenous power shifts. First, quantitative scholars should care greatly about bargaining over power. Although we have established connections between power shifts and war, the above theory indicates that the causal relationship is not obvious. For example, it might be that other bargaining problems cause to both power shifts and war. We need to think carefully about these higher-order issues and search for empirical evidence of them.

Policy-wise, this tells us a great deal about negotiations with Iran. If Tehran constructs a nuclear weapon, it must be doing so because it does not anticipate preventive war. Thus, one way the United States can hold Iran to its commitments under the Joint Comprehensive Plan of Action is to maintain a credible threat to fight a war should Tehran violate the agreement. Internalizing the threat, Iran would not build a weapon. This is perhaps the ideal for Washington—the American threat to invade does all the heavy lifting, allowing the United States to obtain its best policy outcome without actually paying the costs of war.

rationcover

Some Thoughts on The Force Awakens (Spoilers)

Massive spoilers below…

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1) I suspect some viewers might roll their eyes at the fact that the galaxy is still in the middle of a civil war, but this is somewhat realistic. Civil wars tend to last a loooong time. The civil war in Afghanistan, for example, has been going on since 1978. One could argue that Korea has been in civil war for the last 65 years. (The Force Awakens makes it seem like both the Republic and First Order control and govern territory, like North and South Korea.) The good news, if there is any, is that political scientists have a pretty good idea why civil wars take forever to end.

2) What a strange world we live in where James Bond has more screen time in a Star Wars film then Luke Skywalker. (Daniel Craig is the stormtrooper that Rey pulls the Jedi mind trick on.)

3) The trailers spoiled Han Solo’s death. When Kylo Ren pulls out his lightsaber on the bridge, we have yet to see Ren’s battle with Finn in the snow. This means that Ren can’t be giving himself up here, and it would be weird if he simply re-holstered his lightsaber.

4) At the end of Return of the Jedi, Luke seems to believe Vader can go home and everything will be okay. Similarly, Mr. Solo…I mean, Han…seems to think that Kylo Ren can return home and everything will be okay. Their best case scenario is life imprisonment, and execution seems much more likely.

5) Perhaps the most unrealistic thing about A New Hope and The Force Awakens is that, within a few scant hours of receiving intelligence about the big evil weapon, the rebels have some genius plan to destroy the facility. The only way this could happen is if the vulnerability is obvious. But if the vulnerability is obvious, why don’t the bad guys spot it and fix the problem?

6) Also, when will the bad guys learn that sinking massive amounts of capital into one super weapon is not a good investment strategy?

7) How can Han manually leave light speed within a planet’s atmosphere? Given the speed involved and the small window, this is basically impossible.

Understanding the Iran Deal: A Model of Nuclear Reversal

Most of the discussion surrounding the Joint Comprehensive Plan of Action (JCPOA, or the “Iran Deal”) has focused on mechanisms that monitor Iranian compliance. How can we be sure Iran is using this facility for scientific research? When can weapons inspectors show up? Who gets to take the soil samples? These kinds of questions seem to be the focus.

Fewer people have noted Iran’s nuclear divestment built into the deal. Yet Iran is doing a lot here. To wit, here are some of the features of the JCPOA:

  • At the Arak facility, the reactor under construction will be filled with concrete, and the redesigned reactor will not be suitable for weapons-grade plutonium. Excess heavy water supplies will be shipped out of the country. Existing centrifuges will be removed and stored under round-the-clock IAEA supervision at Natanz.
  • The Fordow Fuel Enrichment Plant will be converted to a nuclear, physics, and technology center. Many of its centrifuges will be removed and sent to Natanz under IAEA supervision. Existing cascades will be modified to produce stable isotopes instead of uranium hexafluoride. The associated pipework for the enrichment will also be sent Natanz.
  • All enriched uranium hexafluoride in excess of 300 kilograms will be downblended to 3.67% or sold on the international market.

Though such features are fairly common in arms agreements, they are nevertheless puzzling. None of this makes proliferation impossible, so the terms cannot be for that purpose. But they clearly make proliferating more expensive, which seems like a bad move for Iran if it truly wants to build a weapon. On the other hand, if Iran only wants to use the proliferation threat to coerce concessions out of the United States, this still seems like a bad move. After all, in bargaining, the deals you receive are commensurate with your outside options; make your outside options worse, and the amount of stuff you get goes down as well.

The JCPOA, perhaps the worst formatted treaty ever.

The JCPOA, perhaps the most poorly formatted treaty ever.

What gives? In a new working paper, I argue that undergoing such a reversal works to the benefit of potential proliferators. Indeed, potential proliferators can extract the entire surplus by divesting in this manner.

In short, the logic is as follows. Opponents (like the United States versus Iran) can deal with the proliferation problem in one of two ways. First, they can give “carrots” by striking a deal with the nuclearizing state. These types of deals provide enough benefits to potential proliferators that building weapons is no longer profitable. Consequently, and perhaps surprisingly, they are credible even in the absence of effective monitoring institutions.

Second, opponents can leverage the “stick” in the form of preventive war. The monitoring problem makes this difficult, though. Sometimes following through on the preventive war threat shuts down a real project. Sometimes preventive war just a bluff. Sometimes opponents end up fighting a target that was not even investing in proliferation. Sometimes the potential proliferator can successfully and secretly obtain a nuclear weapon. No matter what, though, this is a mess of inefficiency, both from the cost of war and the cost of proliferation.

Naturally, the opponent chooses the option that is cheaper for it. So if the cost of preventive war is sufficiently low, it goes in that direction. In contrast, if the price of concessions is relatively lower, carrots are preferable.

Note that one determinant of the opponent’s choice is the cost of proliferating. When building weapons is cheap, the concessions necessary to convince the potential proliferator not to build are very high. But if proliferation is very expensive, then making the deal looks very attractive to the opponent.

This is where nuclear reversals like those built into the JCPOA come into play. Think about the exact proliferation cost that flips the opponent’s preference from sticks to carrots. Below that line, the inefficiency weighs down everyone’s payoff. Right above that line, efficiency reigns supreme. But the opponent is right at indifference at this point. Thus, the entire surplus shifts to the potential proliferator!

The following payoff graph drives home this point. A is the potential proliferator; B is the opponent; k* is the exact value that flips the opponent from the stick strategy to the carrot strategy:

Making proliferation more difficult can work in your favor.

Making proliferation more difficult can work in your favor.

If you are below k*, the opponent opts for the preventive war threat, weighing down everyone’s payoff. But jump above k*, and suddenly the opponent wants to make a deal. Note that everyone’s payoff is greater under these circumstances because there is no deadweight loss built into the system.

Thus, imagine that you are a potential proliferator living in a world below k*. If you do nothing, your opponent is going to credibly threaten preventive war against you. However, if you increase the cost of proliferating—say, by agreeing to measures like those in the JCPOA—suddenly you make out like a bandit. As such, you obviously divest your program.

What does this say about Iran? Well, it indicates that a lot of the policy discussion is misplaced for a few of reasons:

  1. These sorts of agreements work even in the absence of effective monitoring institutions. So while monitoring might be nice, it is definitely not necessary to avoid a nuclear Iran. (The paper clarifies exactly why this works, which could be the subject of its own blog post.)
  2. Iranian refusal to agree to further restrictions is not proof positive of some secret plan to proliferate. Looking back at the graph, note that while some reversal works to Iran’s benefit, anything past k* decreases its payoff. As such, by standing firm, Iran may be playing a delicate balancing game to get exactly to k* and no further.
  3. These deals primarily benefit potential proliferators. This might come as a surprise. After all, potential proliferators do not have nuclear weapons at the start of the interaction, have to pay costs to acquire those weapons, and can have their efforts erased if the opponent decides to initiate a preventive war. Yet the potential proliferators can extract all of the surplus from a deal if they are careful.
  4. In light of (3), it is not surprising that a majority of Americans believe that Iran got the better end of the deal. But that’s not inherently because Washington bungled the negotiations. Rather, despite all the military power the United States has, these types of interactions inherently deal us a losing hand.

The paper works through the logic of the above argument and discusses the empirical implications in greater depth. Please take a look at it; I’d love to hear you comments.

Bargaining Power and the Iran Deal

Today’s post is not an attempt to give a full analysis of the Iran deal.[1] Rather, I just want to make a quick point about how the structure of negotiations greatly favors the Obama administration.

Recall the equilibrium of an ultimatum game. When two parties are trying to divide a bargaining pie and one side makes a take-it-or-leave-it offer, that proposer receives the entire benefit from bargaining. In fact, even if negotiations can continue past a single offer, as long as a single person controls all of the offers, the receiver still receives none of the surplus.

This result makes a lot of people feel uncomfortable. After all, the outcomes are far from fair. Fortunately, in real life, people are rarely constrained in this way. If I don’t like the offer you propose me, I can always propose a counteroffer. And if you don’t like that, nothing stops you from making a counter-counteroffer. That type of negotiations is called Rubinstein bargaining, and it ends with a even split of the pie.

In my book on bargaining, though, I point out that there are some prominent exceptions where negotiations take the form of an ultimatum game. For example, when returning a security deposit, your former landlord can write you a check and leave it at that. You could try suggesting a counteroffer, but the landlord doesn’t have to pay attention—you already have the check, and you need to decide whether that’s better than going to court or not. This helps explain why renters often dread the move out.

Unfortunately for members of Congress, “negotiations” between the Obama administration and Congress are more like security deposits than haggling over the price of strawberries at a farmer’s market. If Congress rejects the deal (which would require overriding a presidential veto), they can’t go to Iran and negotiate a new deal for themselves. The Obama administration controls dealings with Iran, giving it all of the proposal power. Bargaining theory would therefore predict that the Obama administration will be very satisfied[2], while Congress will find the deal about as attractive as if there were no deal at all.

And that’s basically what we are seeing right now. Congress is up in arms over the deal (hehe). They are going to make a big show about what they claim is an awful agreement, but they don’t have any say about the terms beyond an up/down vote. That—combined with the fact that Obama only needs 34 senators to get this to work—means that the Obama administration is going to receivea very favorable deal for itself.

[1] Here is my take on why such deals work. The paper is a bit dated, but it gets the point across.

[2] I mean that the Obama administration will be very satisfied by the deal insofar as it relates to its disagreement with Congress. It might not be so satisfied by the deal insofar as it relates to its disagreement with Iran.