Kenneth Oye - Game Theory

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In the section entitled "Payoff Structure: Mutual and Conflicting Preferences," I discuss how

payoffs affect the prospects for cooperation and present strategies to improve the prospects
for cooperation by altering payoffs. Orthodox game theorists identify optimal strategies given
ordinally defined classes of games, and their familiar insights provide the starting point for the
discussion. Recent works in security studies, institutional microeconomics, and international
political economy suggest strategies to alter payoff structures and thereby improve the
prospects for cooperation.

In the next section, entitled "Shadow of the Future: Single-play and Iterated Games," I discuss
how the prospect of continuing interaction affects the likelihood of cooperation; examine how
strategies of reciprocity can provide direct paths to cooperative outcomes under iterated
conditions; and suggest strategies to lengthen the shadow of the future. In addition, this
section shows that recognition and control capabilities- the ability to distinguish between
cooperation and defection by others and to respond in kind-can affect the power of reciprocity,
and suggests strategies to improve recognition capabilities.

In the third section, "Number of Players: Two-Person and N-Person Games," I explain why
cooperation becomes more difficult as the number of actors increases; present strategies for
promoting cooperation in N- actor situations; and offer strategies for promoting cooperation by
reducing the number of actors necessary to the realization of common interests.
Game theorists and oligopoly theorists have long noted that cooperation becomes more
difficult as numbers increase, and their insights provide a starting point for discussions Recent
work in political economy focuses on two strategies for promoting cooperation in thorny N-
person situations: functionalist analysts of regimes suggest strategies for increasing the
likelihood and robustness of cooperation given large numbers of actors;" analysts of ad hoc
bargaining in international political economy suggest strategies of bilateral and regional
decomposition to reduce the number of actors necessary to the realization of some mutual
interests, at the expense of the magnitude of gains from cooperation.
Each of the three circumstantial dimensions serves both as an explanation of cooperation and
as a target of strategies to promote cooperation. The concluding section of this essay provides a
roadmap to our efforts to test these preliminary explanations and strategies. By applying this
common analytic framework to cases in economic and security affairs and by searching for
explicit parallels and differences in the incidence, causes, and prospects for cooperation, the
authors hope to contribute to a deeper understanding of international cooperation.

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