THE IMPORTANCE OF BEHAVIORAL ANALYSIS IN RATIONAL CHOICE THEORY

BARBARA A. MONTGOMERY

Major: Political Science

Minor: International and Comparative Studies

Class of 2022

I. INTRODUCTION

Conflict: how do we win? How do we get an adversary to think it knows our strategy and behave based on that so that we can then take advantage of the adversary’s thinking and adjust our choices to manipulate the adversary? Rational choice theory (RCT) and its application of game theory can help us visualize and even quantify conflict; however, there are certain limitations to this approach. Behavioral analysis theory (BAT) provides insight into why nation-states make certain decisions and how to predict state behavior more accurately.

I will critically analyze the rationalist choice perspective of Thomas Schelling in Schelling’s The Strategy of Conflict (1980). Using Schelling’s application of rational choice theory (RCT) as an example, I will show how Schelling’s argument is incomplete and insufficient to handle the complexity of problems relating to international relations. Without a behavioral decision-making analysis (presented by Robert Jervis in Jervis’s Perception and Misperception in International Politics (2017)), RCT may lead to incorrect perceptions and poor decisions. First, I will introduce each author and his works. Second, I will argue that Jervis’s BAT argument identifies and provides solutions to Schelling’s weaknesses. Third, I will argue for an approach giving a strengthened view of RCT when it is supported by BAT.

Rational And Irrational Actors

Schelling (1980) views rational behavior as behavior consistent with one’s value system that leads to the greatest utility or benefit for the actor. Therefore, even those considered “neurotic,” Schelling suggests, can have a deeper level of rational behavior that, although seemingly irrational on the surface, results in behavior consistent with the “neurotic” actor’s value system (1980). Conversely, an irrational actor would be an actor who does not act according to its own value system and instead consistently behaves in ways that harm rather than benefit the actor. I will use this understanding of “rational” and “irrational” actors.

DEFINITION OF RATIONAL CHOICE THEORY (RCT)

RCT involves how such rational actors analyze a set of options and determine which will provide the best utility in relation to the choices of other actor(s). Political theorist Stephen Walt (1999) refers to RCT as “formal theory,” which Walt defines as “the construction of specific mathematical models intended to represent particular real-world situations and the use of mathematics to identify the specific solutions (“equilibria”)” (p. 9). In RCT, an actor weighs the importance of their choices, orders them by importance and their likelihood of being chosen, and then identifies the solution(s) that give the actor the best possible outcome relative to the best possible outcome of the other actor(s) (Walt, 1999, p. 9; Levy, 1997, p. 88). I will use the words “rational choice theory,” “rational theory,” “formal theory,” and the acronym “RCT” interchangeably.

II. THOMAS SCHELLING THE STRATEGY OF CONFLICT OVERVIEW

Schelling first published The Strategy of Conflict in 1960, and it was republished in 1980. Schelling went on to win the Nobel Prize in Economics in 2005, and he passed away in 2016. In his work, Schelling examines interdependent strategies to deter conflict. Schelling applies insights from an individual actor’s behavior in games to a state’s behavior in conflicts. Through the application of game theory, Schelling works out a strategy of conflict predominantly focusing on two-player games; written during the Cold War, such examples were apt given the bipolar nature of the international system. Three important concepts that mark the essence of Schelling’s strategy for describing conflict and prescribing solutions are bargaining, game theory, and brinkmanship.

Bargaining

Strategy looks a lot like bargaining, Schelling explains. “[Strategy] takes conflict for granted, but also assumes common interest between the adversaries; it assumes a ‘rational’ value-maximizing mode of behavior; and it focuses on the fact that each participant’s ‘best’ choice of action depends on what he expects the other to do” (1980). Each actor or adversary wants the best deal, but the actor’s preferred outcome is contingent upon what that actor thinks the other actor’s preferred outcome is. The actors share mutual interests and must therefore cooperate on some level. The resulting decision by the actors may not be each actor’s favorite or best outcome, but the decision is better than no cooperation at all.

Effective bargaining involves credible threats and promises. In establishing credibility, Schelling makes several paradoxical yet compelling statements about types of strategy: “[These tactics] rest on the paradox that the power to constrain an adversary may depend on the power to bind oneself; that, in bargaining, weakness is often strength, freedom may be freedom to capitulate, and to burn bridges behind one may suffice to undo an opponent” (1980). Schelling demonstrates the power in tacit communication and coordination, which “can reveal information about a player’s value system or about the choices of action available to him… when speech often cannot” (1980). This practice helps alleviate the information asymmetry problem both actors face.

Schelling demonstrates how tacit bargaining can occur using evidence from a series of experiments. With convergent interests, Schelling concludes that, through particular “focal points,” or conspicuous points of connection, actors can cooperate and find each other. And with divergent interests, an actor can coerce the adversary through the actor “binding itself” in ways that seem to weaken the actor but actually force the adversary to make the first move (1980). For example: an actor alerting an adversary of its location, then limiting its communication by claiming the receiver malfunctioned and only the transmitter works, leaves the adversary with no other choice than to make the first move and go find the actor (1980). And in this way, the actor now has the upper hand.

Game Theory

Schelling incorporates game theory into his work, which helps the reader visualize his explanation of bargaining. Unlike zero-sum games, such as a game of chess, in which a player either wins or loses, Schelling’s nonzero-sum or “mixed-motive” games involve interdependence. A strategic actor “influences the other person’s choice, in a manner favorable to one’s self, by affecting the other person’s expectations on how one’s self will behave” (Schelling, 1980). Schelling explains that unlike in the zero-sum game in which an actor is trying to deceive an adversary, in a mixed-motive game, the actor wants to be “found out” knowing the adversary will act according to how it perceives the actor thinks the adversary will act (1980).

Schelling’s strategy of conflict is both a descriptive and prescriptive framework that makes it easier to visualize and quantify conflict. If a player knows why and how an opponent will act, the player can use this information and choose strategic moves that deter the adversary from striking out. In addition, games need not be limited to two players and can have multiple actors or involve third parties. Third parties, through delegation, mediation, and information sharing, can influence the game by limiting the actor trying to win (1980). Schelling’s trump card for his strategy of conflict in RCT is brinkmanship, especially when the stakes are high (1980).

Brinkmanship

Schelling refers to the concept of “brinkmanship” when summing up his strategy of conflict. Bargaining with credible threats and promises to deter conflict involves taking risks akin to “getting onto the slope where one may fall in spite of his own best efforts to save himself, dragging his adversary with him” (Schelling, 1980). When the stakes are high, an actor must show that it will carry out its threat, not that it might (1980). One can practice brinkmanship as incremental steps, having threats grow slowly, building a “tradition of trust” (1980). Moving incrementally tempers the stakes, yet Schelling at the same time concludes that in certain instances, arms races can make sense and do not necessarily threaten stability, as the point is to build a second-strike capability, implying one does not want to make the first strike (1980). Schelling goes a step further by explaining that brinkmanship intentionally cannot fully be controlled, and the point is for a shared risk between an actor and the actor’s adversary. An example of this is setting a tripwire (1980).

III. ROBERT JERVIS

Robert Jervis was inspired by Schelling’s The Strategy of Conflict to write Perception and Misperception (2017). Jervis recently passed away in December 2021. Both Jervis and Schelling were friends, with Jervis having been somewhat of a protégé of Schelling (Wheeler, 2014, p. 484). However, Jervis took a different route in examining conflict by incorporating cognitive behavioral psychology into the study of international relations (IR). While watching Schelling argue theories of deterrence with critic of deterrence

Anatol Rapaport, Jervis observed that the debate was not about theory, but about the “goals, intentions, and motives” of the then-Soviet Union (Wheeler, p. 484). Jervis wrote Perception and Misperception as a response (Wheeler, p. 484).

Perception And Misperception Overview

Perception and Misperception was first published in 1976 and was republished about forty years later in 2017. Like Schelling, Jervis wrote during the Cold War era. In Perception and Misperception, Jervis focuses on the cognitive processes that occur in the decision-maker’s mind, showing how and why decision-makers make apt or poor decisions. According to Jervis, “If it is true that perceptions of the other’s intentions are a crucial element of policy-making and that such perceptions are often incorrect, we need to explore how states perceive others and why and where they often go wrong” (2017). Thus, Jervis focuses on the individual level of analysis, the decision-maker, to look at how and why perceptions are created and what can be done to decrease misperceptions by decision-makers. The two most important principles from Jervis’s work are 1) how perceptions and misperceptions are formed and 2) how to deter misperception. Jervis’s work includes and builds on the theories of leading behavioral psychologists Daniel Kahneman and Amos Tversky (Jervis, 2017).

Formation Of Perceptions And Misperceptions

Jervis (2017) recognizes that, under a similar set of external circumstances, actors may produce a variety of responses. Jervis seeks to explain this phenomenon by analyzing internal processing. Knowing an actor’s belief system and its perception of the other actor can explain a spectrum of potential decisions and responses by the actor. As in a game of strategy, an intelligent actor needs to know how another actor will behave in response to each of several possible plans of action. While an actor may think it knows how it will behave, psychological understanding can assist other actors in accurately predicting how the actor will behave (2017). Jervis provides the example of how the Joint Chiefs of Staff under the John F. Kennedy administration could predict Kennedy’s behavior relating to the Bay of Pigs before Kennedy himself knew his course of action (2017).

Jervis discusses several psychological factors that assist in understanding internal processing and behavioral analysis. Decision-makers tend toward “cognitive consistency,” in which they see what they want to see and subsequently filter new data into their pre-existing images of other actors (2017). Decision-makers are also inclined to focus on immediate issues and place themselves at the center of international issues. Jervis provides the example of how the U.S. saw actions by the Soviet Union, such as providing missiles to Cuba, as direct threats to the U.S. Thus, a defensive action of increasing one’s self-defense may be interpreted as an offensive act to another actor. Information asymmetry can also prevent decision-makers from making well-informed decisions. When it comes to history, Jervis says, “history is the best teacher but its lessons are not on the surface” (2017). For example, Jervis says it is unhelpful to divide historical events simply into “successes” or “failures” (2017) as well as that decision- makers can be influenced by first-hand experiences or experiences shared by a large group of people. Finally, decision-makers have a strong resistance to both change and to considering alternatives. Through cognitive dissonance, decision-makers can maintain their pre-conceived but disproven notions through making the accurate information fit into the decision-makers’ original statements—pretending that the decision-makers knew the right answers all along (2017).

Deterring Misperceptions

Through identifying the process of forming perceptions and misperceptions, Jervis highlights several important misperceptions for decision-makers to consider (2017). Jervis states that decision-makers must understand the principle of decentralization. States are comprised of multiple decision-makers and do not act as a uniform, homogenous unit, as some such as political scientist Jack Levy (1997) would contend (p. 100). IR scientists James Goldgeier and Philip Tetlock (2001) would concur, saying that “[d]ecision makers virtually never work in social isolation” (p. 75). A major reason for misperception is failing to look at and understand alternative explanations, given a decision-maker’s strong bias against attitude changes (Jervis, 2017).

While Jervis claims that his work is not meant to prescribe policy, one of the suggestions Jervis does make is to have a devil’s advocate on retainer to provide alternative images of what other actors believe and value, and consequently several scenarios of how the other actor may act (2017). Goldgeier and Tetlock (2001) similarly alert that “[p]eople, even experts, are often too slow to change their minds in response to unexpected events,” particularly when circumstances are unclear (p. 100). Jervis would respond that decision-makers need to analyze beyond how they think another will act: “You must also try to estimate how the other will respond if he has intentions and perceptions that are different from those that you think he probably has” (2017).

IV. A CRITIQUE OF SCHELLING

BARGAINING: HOMOGENEITY PROBLEM

Schelling treats actors as homogenous units, not accounting for differences in culture, beliefs, and values. Jervis would argue against this approach, saying that what one values can vary by culture and society, and that different value systems and psychological factors like biases and tendencies to draw analogies to real-world events influence perception and misperception in decision-making. Certain tactics Schelling broaches could be interpreted as threatening to some and not threatening to others.

Both Jervis and Schelling agree that the devastation from the use of nuclear weapons on Nagasaki and Hiroshima is sufficient to deter atomic warfare now. However, one must also consider the current and future world order with multiple nuclear powers and nonstate actors that would like to acquire nuclear weapons—points Schelling’s and Jervis’s works do not discuss, with Schelling’s work understandably being older and Jervis perhaps thinking the concern of multiple nuclear powers with hungry nonstate actors a nonissue.

Without understanding one’s adversary, threats and promises, the capstone bargaining pieces of Schelling’s strategy of conflict, will be ineffective. Goldgeier and Tetlock (2001) broach the two World Wars as examples of misperceiving the enemy — in World War I, the Allied powers did “too much” by teaming up unnecessarily in response to perceived offensive dominance, and in World War II, the Allied powers did “too little” by assuming that other powers would take care of the conflict (p. 72). Thus, threats and promises were either seen as unnecessary or insufficient (p. 72; Jervis, 2017). Walt (1999) cites Barry Nalebuff in emphasizing that it is not certain how states will react to various actions: “Intervening could be seen as a sign of weakness… or it could be seen as a sign of strength” (p. 19).

RATIONAL THEORY: RELEVANCY

As a “first-wave” rational theorist, Schelling cautioned against approaching formal theory as “solely a branch of mathematics” (Walt, 1999; Schelling, 2017); however, Jervis would likely argue that Schelling does not incorporate sufficient knowledge of the beliefs, values, and intentions of actors. Without this incorporation, decision-makers cannot accurately understand “why and where they often go wrong” (Jervis, 2017).

Included in Schelling’s approach to formal theory is Schelling’s problematic focus on two-player games. As Jervis (2017) emphasizes along with Goldgeier and Tetlock (2001), there are multiple decision-makers, and anticipating how a certain entity or state will respond depends on a variety of factors from a variety of decision-makers with authority. Schelling could have been focusing on two-player games because such games are easiest to illustrate in a matrix. Another factor could have been that Schelling wrote The Strategy of Conflict during the Cold War, when there were only two hegemonic world powers — the U.S. and the Soviet Union. Regardless, the two-player matrices do not accurately represent the multitude of decision-makers, and, as Jervis would likely add today, the multiple large powers currently in existence. Thus, Schelling’s strategic model suffers from being incomplete.

Another potential pitfall Jervis may present to Schelling is cognitive dissonance, or forcing systematic errors into a game theoretical framework. Schelling must be careful not to follow the tendencies of “second wave” formal theorists. “Random errors can be explained away easily by strict structuralists and game theorists” Goldgeier and Tetlock caution, (2001, p. 72) and such, theorists can presume that something other than the process is wrong. Jervis discusses conversing with rational choice theorists who react to disproven results by saying, “That can’t be true!” instead of asking, “Where did my model go wrong? How do I explain this aspect of the world?” (Wheeler, 2014, p 500). Walt joins the fray, saying that when formal models result in multiple equilibria or “solutions a rational actor would not depart from unilaterally,” there is not a convincing way to deduce the explanation for why and how certain outcomes are determined to happen (Walt, 1999, p. 18). Walt does acknowledge Schelling’s divergence from this line of thought through Schelling’s principle of “focal points,” which are derived from mutual interests or understanding between actors (p. 19), but “mutual interests” is as specific as Schelling gets in looking at the beliefs and values of actors.

RATIONALITY AND BRINKMANSHIP: ILL-DEFINED AND IRRESPONSIBLE

Schelling discusses at length the principles of rationality and irrationality, explaining that even in irrationality, certain elements can be explained as rational. Yet Schelling does not spell out the difference between a rational actor using irrational tactics from an irrational actor using irrational tactics. For example, some members of terrorist groups have been open to negotiations while others actually want to fall off the brink and drag down as many other actors as they can, such as suicide bombers. If “[r] ationality of the adversary is pertinent to the efficacy of a threat” (Schelling, 1980), then an actor should know the difference. Otherwise, the threat could easily self-inflict. This is a situation where one of Schelling’s paradoxical conclusions, less information gives more power, severely comes up short.

Jervis’s choice to focus less on rationality and more on analogies and patterns of state behavior helps to solve this problem. For example, when North Vietnam did not respond positively to U.S. demands that the North quit fighting the war in the South, it was not because North Vietnam was necessarily irrational or did not comprehend the threat; rather, North Vietnam was willing to pay the significant cost of attacks from the U.S. for North Vietnam to maintain its position (2017). In another instance, Jervis looks at the tendency for actors to be quick to make assumptions that a power is hostile, which Goldgeier and Tetlock (1999) refer to as “attribution errors,” in which it is assumed that a power is hostile when it is taking defensive steps, where in reality the power is maintaining the status quo (p. 73). The opposite can occur in which powers are assumed to be maintaining the status quo, where in actuality such powers are intending to expand. But Jervis implies that the former case of being too quick to label powers as hostile is more common than being too slow. Therefore, while it would be more rational to not assume hostility where it may not occur, many realists would take the “irrational” approach by saying that the risk is not worth it — a conclusion not necessarily upheld by Jervis but implied by international relations BAT. For Jervis, this emphasizes the need for devil’s advocates to provide alternative potential intentions of other states (2017).

Given Schelling’s murky distinction between rational and irrational actors each using irrational tactics, Jervis would aptly call into question Schelling’s concept of brinkmanship. Ramping up the pressure and increasing threats, considering limited warfare, and conceding that an arms race “does not necessarily lead to a more and more unstable situation” (Schelling, 1980) seems like an irresponsible course of thought and action. Without understanding one’s adversary, brinkmanship may not be the way to go.

V. A SCHELLING REBUTTAL CREDIBLE COMMITMENT

Schelling bases his argument on the principle of credibility — to coerce one’s opponent, an actor must make a credible threat or a promise in such a way that the adversary is convinced beyond a shadow of a doubt that the threat or promise will be carried out. The actor must engage “the power to bind oneself” (Schelling, 1980). Jervis does not take such a high view of credibility, arguing that even when adversaries know that a threat is credible, the adversary may still act, such as North Vietnam in response to U.S. pressure (2017). Or, going to the most extreme example, Jervis presents the credibility of promising or threatening a nuclear response. No issue supersedes an allout nuclear war; therefore, a nuclear threat is futile (2017). But Schelling would look at the situation differently and say that a nuclear threat is already a credible one because it was carried out. Thus, there is a worldwide hesitancy to use nuclear weapons because of their great devastation (Jervis, 2017). As General Leslie R. Groves puts it, “Our reluctance to strike first is a military disadvantage to us; but it is also, paradoxically, a factor preventing a world conflict today” (qtd. in Schelling, 1980). With the possession of nuclear weapons by nuclear powers acting as a deterrent, Schelling argues that credible threats can still be made and limited wars can still occur with actors that possess nuclear weapons (in Schelling’s case, this was the U.S. and the Soviet Union) (1980). And therefore, rather than seeing a credible threat not panning out as hoped as a failure, Schelling would likely mark this act as but one act in a continual game of strategy. One could argue that the game of strategy Schelling first wrote about between the U.S. and the then-Soviet Union continues to this day.

Jervis suggests that to deter misperceptions, actors should make their beliefs and values “more explicit” through a devil’s advocate (2017); however, Schelling argues that “just talk” is not enough for a credible commitment (1980). Schelling emphasizes that in mixed-motive games, bargaining occurs as dynamic “maneuvers” at different stages so that the game initiated between actors becomes “irreversibly different from what it was before” (1980). With this understanding, Schelling actually does not treat actors as homogenous units, as someone like Jervis may argue, because each bargaining game is unique to Schelling. In addition, Schelling identifies a problem in the communication of information, but the problem is not a lack of information, or information asymmetry, as Jervis might argue; rather, the problem is putting too much stake in communication. Actions and maneuvers, rather than words, may convey and reveal the most accurate information (Schelling, 1980).

Formal Structure

An obvious difference between The Strategy of Conflict and Perception and Misperception is the presence in the former and the absence in the latter of game theoretic, graphic, and mathematical models. Schelling wrote his work to provide a framework in understanding conflict strategically; Jervis wrote his work to dismantle a framework that does not lead to consistent or accurate perceptions (Wheeler, 2014). While both works may seem at odds in this respect, Schelling made it clear that he wanted his theory to apply not simply to formal theorists but also to “people concerned with practical problems” (1980), which Schelling does. Schelling continues in welcoming the concepts from experimental psychology to assist with understanding the symbolism behind an actor’s choices and expectations. Snyder, another influential figure for Jervis (Jervis, 2017; Wheeler 2014), wrote that concepts such as interdependency, the difference between deterrence and defense, costs, benefits, and utility are meant to provide tools through “an analytical framework which some may find useful” and not to find easy and likely elusive solutions (1961).

While some political scientists emphasize the need for BAT in decision-making to understand the field of IR, others caution the lack of empirical data in applying individuallevel decision-making theory with international-level collective state behavior. Levy (1997) cautions against applying generalized behavior decision-making to IR theory (p. 89, p. 98). Levy critiques expected utility theory — a principle of rational theory in which actors make utility-maximizing decisions — along with prospect theory — a psychological concept put forth by Kahneman and Tversky explaining that individuals tend toward loss aversion and make decisions that do not maximize their utilities. Levy argues that generalized BAT and behavior decision-making ideas do not work well when applied to the “ill-structured choice problems foreign policy leaders typically face” (p. 98). Thus, while recognizing the pervasiveness and importance of behavioral decisionmaking theories in IR, Levy still stands behind rational theory until more research is done. Schelling emphasizes the need for structure, and Levy agrees (Schelling, 1980; Levy, 1997). Levy concurrently upholds the importance of reading Jervis while also critiquing Jervis’s lack of structure: “Jervis does not systematically identify different kinds of misperceptions, specify their consequences, or demonstrate what kinds of misperceptions have the greatest impact…neither does he show how they interact with institutional and systemic factors” (Levy, 1983, p. 77).

VI. A STRENGTHENED VIEW OF RATIONAL CHOICE THEORY

Through critically analyzing Schelling’s work with critiques from Jervis’s work and along with input from several notable IR theorists, I suggest that RCT supported by BAT is the most relevant, useful, and realistic framework for understanding, explaining, and effectively engaging in conflict. Jervis (2017) points out that a state is made up of several parts or actors. Such “parts” could be a President, Prime Minister, Congress, Parliament, political appointee, nonstate actor, military group, cartel, mafia, or terrorist organization. Understanding the perceptions of a state’s parts is key and identifying the one(s) with the most influence is crucial. For example, Henry Kissinger had significant sway in U.S. policy as both National Security Advisor and Secretary of State during the Richard Nixon and Gerald Ford Administrations; the President’s or Prime Minister’s position in Russia is the most powerful depending on which position Vladimir Putin holds; and a military junta currently holds power in Myanmar as of February 2021.

Every game between an actor and adversary is unique with the rules adapting at every node (Schelling, 1980), but BAT bolsters an actor’s ability to make better decisions through making better perceptions. An actor can use its knowledge of how the adversary perceives the actor as well as how the adversary perceives itself so that the actor can get inside the adversary’s head. From this position, an actor can more accurately interpret its possible choices relative to those of the adversary. Accurately perceiving an adversary allows an actor to make credible threats through deliberately binding or weakening itself to manipulate the adversary. Accurately perceiving an adversary also allows an actor to identify a rational actor acting irrationally from an irrational actor acting irrationally. Thus, an actor can responsibly walk the adversary to the very edge of the brink in seemingly irrational ways until the adversary folds and the game is won.