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Introduction to International Relations
Lecture 3: The Rational Actor Model
Professor Branislav L. Slantchev
Department of Political Science, University of California – San Diego
April 19, 2005
Overview. Continuing with our conceptual framework, we now study one of the most fundamental ideas: the rational pursuit of objectives. We look at what this means, what assumptions one has to make, and what problems one may have to deal with. We then examine the three fundamental features of the rational actor model: the actors, their environment, and the outcomes.
Outline of Lecture 3: The Rational Actor Model
- Rational Actor Model
a) (instrumental) rationality: purposeful behavior b) intelligence c) the (idealized) model d) optimal choice
- mistakes
- unintended consequences
- deliberate risk e) utility and expected utility f) uncertainty
- environmental
- strategic
- Critiques
a) individual limitations (bounded rationality) b) organizational (principal-agent) c) social aggregation
- Why model is still useful?
- purposeful behavior despite mistakes
- actors learn from experience
- actors design institutions to overcome problems
- analysis tools actively developed
- what is the alternative?
- Strategic choice
a) actors: preferences, beliefs b) environment: actions, information c) strategic interaction
optimizing. If you imagine that each outcome is associated with some number, called utility or payoff, then the decision maker is choosing the option that yields the highest payoff, so she is maximizing utility. When we talk about optimal choice, we do not assume that actors never make mistakes. In fact, we can evaluate what effect the possibility of making a mistake will have on overall behavior. Mistakes occur when actors erroneously evaluate the situation, either because they misunderstand it, or because they do not have the time or resources to do it properly. In addition to mistakes, actors’ behavior may sometimes produce unintended consequences. That is, outcomes that the actors had failed to anticipate and that did not figure in the original evaluation of the option. We must distinguish between mistakes and unintended consequences on one hand, and deliberate risk on the other hand: sometimes actors may choose a course of action that may result in painful outcomes. If they do so deliberately and that outcome occurs, we cannot say that they have made a mistake: rather, they took a risk and the odds went against them. Taking risks can be a rational thing to do, and our model will accommodate that. When we deal with choice under uncertainty, an action may produce one out- come with some probability and yet another with different probability. For ex- ample, if we decide to attack Iraq, then Saddam could have either capitulated immediately or fought to the death. Both (and many other possibilities) could occur, and we are not sure which one will, in fact, occur once the attack be- gins. However, we can form some beliefs and say that Saddam is unlikely to capitulate, so we may estimate the probability of outright capitulation to be low, say, 1%, and the probability of fighting to the death to be 99%. Suppose we have another option, which is targeted assassination: it could kill Saddam with probability 5% (and allow us to avert war) and it can fail with probability 95%, in which case we have to attack anyway but Saddam would have been warned that we’re coming, so the war would be a bit more costly. Which option do you chose? When we’re dealing with uncertainty, we would calculate the expected utility from each option and then choose the one that yields the highest expected util- ity/payoff. In other words, we would behave as if we are maximizing expected utility. Roughly, this is a way to take into account the various probabilities attached to the outcomes and compute which ones are better than others. There are two types of uncertainty that we have to deal with. Environmental uncertainty arises from the poor information actors have about the environ- ment they are in, about other actors, or about the likely consequences of their actions. Because the real world is complicated and a variety of factors combine to produce outcomes, one can never predict with certainty what would hap- pen if a course of action is chosen, how others will react to it, and what the eventual outcome will be. The situation is further worsened by other actors (opponents) actively trying to obfuscate your ability to predict. This strategic uncertainty arises from the rational behavior of the various actors and can se- riously confuse matters. If your opponent knows that you will be trying to infer
information from her actions, she may behave in a way specifically designed to prevent your from doing that. We shall see instances of this when we discuss crisis bargaining. The branches of mathematics that deal with all these issues are called deci- sion theory and game theory. Although we shall encounter some aspects of both, we shall not deal with them except peripherally in this course. It is suf- ficient to remember that these are mathematical tools for analyzing decision making in various environments. Both have made huge impact on the study of economics, political science, biology, and are making inroads in sociology and anthropology. You will probably see them from time to time as you continue your studies.
2 Cognitive and Social Critiques
To recapitulate, the rational actor model hypothesizes that people are rational in the sense that they choose actions that somehow help them achieve their goals. This may not look controversial. However, one may well wonder about the ability of the actors to relate means to ends in an effective way. This is the in- dividual limitation critique. For example, how much do the actors know about the environment in which they act? How capable are they of processing this information efficiently? Do they have enough time to ponder the alternatives? Are they operating under stress, or under mistaken assumptions? How limited are our cognitive capacities and how does this reflect on our rationality? These problems have to deal with the simple fact that we are imperfect humans with limited abilities who operate under uncertainty and under various constraints of time and resources. (In Chapter 7, the authors go in depth about various psychological biases and problems of bounded rationality. You should review these carefully.) Yet another issue (not a problem because we can actually learn how to an- alyze it) with the model is that sometimes actors do not have control over the implementation of their decisions, the so-called principal-agent problem, or the organizational critique. This arises in situations where the decision maker, the principal, has to delegate to an agent the execution of the policy. In other words, you want certain goals achieved but your agent (who is usually better informed about the implementation details) is the one who actually has to do it. If your preferences are perfectly aligned with those of the agent, there is no problem. On the other hand, very often the preferences may be different, perhaps dras- tically different. The agent may simply sabotage your goals, or may implement the action in a way that thwarts other goals you have in mind. How to structure the incentives of the agent in such situations is the subject of a fairly large and sophisticated literature in economics. Hence, this is not so much of a problem as it is something that we have to carefully take into account. Yet another problem with the model is that frequently various people par-
tional organizations (like the UN or the WTO), nongovernmental organizations (like Greenpeace, Amnesty International, or the Red Cross), bureaucracies and local governments, and even individuals. International relations is the study of the behavior of these actors; that is, the interactions among large organized groups of people. To analyze these interactions, we must distinguish three components: (i) the actors, (ii) the environment in which they act, and (iii) how outcomes are produced from the actions.
3.1 The Actors: Preferences and Beliefs
Here are some examples of different actors in whose interaction we might be interested: states fighting a major war, United Nations engaged in peacekeep- ing operations, governments of two states negotiating a trade treaty, the min- istries of a country seeking accession into the European Union (EU), State De- partment and Department of Defense struggling for control over foreign policy, General Motors and Ford lobbying the government for protection against “un- fair” foreign-trade practices, French farmers dumping grapes to protest agricul- tural policies of the EU, individuals engaging in terrorism. It should be evident that we are not interested in fixing some particular level of social aggregation as the unit of analysis. That is, we do not want to say that we shall investigate relations between states only, or between leaders of states, or even between organizations within states. International relations are far less conveniently structured than this, and we shall have to account of various dif- ferent types of actors getting involved. As you should recall, we have referred to these as different levels of analysis. To deal with this complexity, we shall use an abstract definition of an actor. An actor has two attributes: preferences and beliefs. To say that an actor has preferences means that it can rank order different outcomes according to some criterion or criteria. For example, consider the situation with Iraq and suppose there are six possible outcomes: (i) Iraq pro- vides acceptable proof of dismantling of its WMD programs, (ii) Iraq agrees to dismantling whatever is left of these programs under international supervision, (iii) Saddam steps down as Iraq’s leader, (iv) the United States invades Iraq and wins, (v) the United States invades Iraq and loses, or (vi) the US does nothing. The United States is an actor that has a specific preference ordering. That is, it ranks these alternative outcomes in some rational way. Similarly, we can designate the State Department, or Saddam, or President Bush for that matter as actors, and they all will have their own preference orderings. Obviously, when we say “the U.S. is an actor,” we are already deep into abstraction. The question is whether this particular one is useful (we shall see that sometimes it is, and sometimes it is not). The other attribute of an actor is the beliefs it has about the preferences of other actors. Again, since we are interested in interaction among actors, we want to know how these actors will behave, which in turn depends on what they think others will do. To form an expectation about the behavior of other actors, it is
necessary to have some belief about what preferences the other actors have. For example, we might be uncertain about whether Saddam’s preferences are such that he prefers (i) to (ii) above, but we can hold a belief about the likelihood that it is the case. When actors are uncertain, as it is usually the case because they seldom possess complete information, beliefs are crucial to the choice of action. Thus, we shall study the interaction among actors, where actors are defined by two attributes, their preferences and their beliefs.
3.2 The Environment: Actions and Informational Structure
Actors, of course, do not make their choices in vacuum. The other defining com- ponent of our approach to international relations is the strategic environment in which interaction takes place. An environment is composed of actions that are available to the actors and an information structure. The first is the set of actions which summarize how actors can interact. For example, during crisis negotiations, the set of actions might include (i) escalat- ing the crisis by taking a provocative step, such as mobilizing troops or sending aircraft carriers into a volatile region, (ii) deescalating a crisis, (iii) starting a war, (iv) backing down and accepting the other side’s demands, (v) producing new de- mands, (vi) insisting on previous demand and adopting a wait-and-see attitude, (vii) organize support of allies, (viii) make an offer on an unrelated issue linked to the opponent accepting your position on the one currently under considera- tion. The list can go on and on, although in most cases it is surprisingly short because it excludes all “irrelevant” choices. For example, although an actor may choose to produce more sugar, this choice will not be part of the crisis bar- gaining environment because it is not relevant for the decisions to be made in that strategic context. The environment limits the possible actions physically as well. For example, the action “initiate nuclear strike” is simply not available to non-nuclear powers. The second component of the environment is its information structure. That is, what the actors can know and what they have to infer from observable behav- ior of others. This is related to beliefs because that information available in the environment determines in part the beliefs that the actors will hold. For exam- ple, suppose that in the crisis one side ostensibly deploys an armored division in an attempt to force the other to accept its demands. The move may appear aggressive, causing the other to update its beliefs and revise its estimate of the likelihood that its opponent is prepared to go to war. However, suppose that from its spies that side also learns that the tanks are old and there is insufficient fuel and supplies to actually put them in action. The deployment now appears as an empty bluff, and so the revised beliefs will very likely be different. We shall deal with cases where actors do not possess perfect information. They may be quite unsure about what their opponents are doing and why. It is actually quite possible (although not very easy) to analyze these situations of incomplete information. We shall gain some intuition about what actors can do to attempt to elicit more information, and how they can make use of the sparse
