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This chapter introduces basic concepts and notations by looking at a homogeneous labour market with no employee rents. In such a world, there is no support for labour market rigidities. We show that this result follows from a more general, deeper property, namely that under free entry of firms, the unemployed should be in favour of leaving the determerination of job characteristics to the market.

This chapter discusses the book's argument that joint war planning provides a useful conceptual framework for explaining agreement and nonagreement in alliance treaty negotiations. Drawing on bargaining theory and negotiation analysis, it focuses on two key variables. The first variable is compatibility of ideal war plans. This refers to the participants' respective ideal war plans not having contradictory strategic components or operational components. Tensions can arise from conflicting military doctrines, such as one negotiation participant adhering to an offensive doctrine and another following a defensive doctrine. Thus, the key to ideal war plan compatibility is that both participants have similar notions of the threat and similar philosophies about the application of military force against that threat. The second variable is the attractiveness of outside options. Outside options are the policies each participant will pursue if the negotiation ends in nonagreement. Such policies include unilateral action or an alliance treaty with another state. The chapter then explains how these two variables lead to four types of alliance treaty negotiations: Same Page, Pleasant Surprise, Revealed Deadlock, and Standard Bargaining. It also details the three components of a war plan: strategic, operational, and tactical.

This chapter explores basic patterns in the data described in the previous chapter using cross tabulations. These tabulations show that having strategic and operational compatibility is strongly associated with a higher rate of agreement in alliance treaty negotiations. They also demonstrate that agreement can be reached, though less often, even between states that lack ideal war plan compatibility. The suggestive evidence offered by these cross tabulations is useful, but the cross tabulations also raise questions. While the initial patterns are supportive of this book's theory, the chapter is concerned about potential complications in the data that could undermine the ability to draw inferences about the relationships between variables. These potential complications include selection bias and omitted variable bias. The chapter then identifies how and under what conditions the existence of an outside option influences the outcome of alliance treaty negotiations.

This concluding chapter summarizes the book's main claims and empirical findings, discussing the implications of these findings as well as directions for future research. At their heart, alliance treaties are about using military force. As such, war planning can be conceptualized as the core of alliance treaty negotiations. Equipped with this premise, the book argued that the key variable determining whether conditions are conducive to agreement is the compatibility of the participants' ideal war plans. These plans must be both operationally and strategically compatible. When war plan compatibility is low, the second key explanatory variable comes into play: the number of negotiation participants that have attractive outside options. The chapter then highlights how the arguments and evidence in the book indicate new research directions in four areas related to alliances: alliance treaty design, alliance reliability, NATO expansion, and the formation of defense cooperation agreements.

This chapter focuses on an important example of an alliance treaty negotiation that ended in nonagreement: the 1901 Anglo-German negotiations. There are three reasons why this case is useful for evaluating the book's theoretical claims. First and foremost, this case is well predicted by the statistical model from Chapter 3. The model from Chapter 3 predicts this particular case well because the case was coded as 0 on the both strategic and operational compatibility variable. This score means that Germany and Britain had incompatible ideal war plans. Second, the 1901 Anglo-German negotiations are historically important. Indeed, a number of observers following World War I viewed these negotiations as the great “missed opportunity” to set Anglo-German relations on a path that might have avoided the war. Third, this case is useful for contrasting the author's war-planning explanation with the competing explanation of reliability concerns. The chapter then describes Britain's outside options on entering the negotiation and explains why the British considered their outside options to be attractive. Focusing on the British outside options is important, because the British were the party that walked away from the negotiation.

This chapter studies the 1948–49 negotiations that produced the North Atlantic Treaty. This case is useful to explore because previous scholarship on these negotiations emphasized the need to overcome entrapment concerns. However, by drawing on a host of sources, the chapter demonstrates that entrapment concerns were not more important than the parties' efforts to overcome incompatibilities in the strategic component of their ideal plans, namely, the geographic scope of the treaty. The parties agreed that the Soviet Union constituted a threat, but they disagreed on the geographic reach of that threat. The French were gravely concerned about Soviet influence in southern Europe, especially the possibility that Italy could enter the communist bloc. For the British and Americans, the primary concern was coercive Soviet threats toward states in northern Europe, especially Norway. The United States had a viable outside option of unilateral action and, therefore, could afford to walk away. Whether France or any other participant perceived itself as also having an attractive outside option is less clear. What is clear is that the participants were unwilling to test this possibility: France's threats to walk away induced its negotiation partners, believing that France had an attractive outside option, to concede to its demands.

In this chapter, the implications of Voeten’s (2001) model about the impact that outside options on behavior inside the Security Council are tested empirically. As the most powerful state in the international system, the United States has the ability to intervene in any con ict in the world. The likelihood that it will do so, however, is not equal in all cases. After estimating the chance that the US will intervene in a particular con ict, the effect of that likelihood on the Security Council’s decision to send peacekeepers is explored. When the US outside option is credible, other permanent members are more willing to make concessions to facilitate action within the Council.

This chapter uses international relations theory to conceptualize the BRICS (Brazil, Russia, India, China, and South Africa) as a club emulating the incumbent world powers. The BRICS operate as an informal club to increase their bargaining power and influence global economic governance. They are motivated by their common aversions to the dominant power of the G7, particularly the United States, and challenges to their autonomy. These five countries press to have a greater voice within existing multilateral institutions, including the major international financial institutions, while pursuing the outside option of founding parallel multilateral institutions. Given China’s disproportionate strength within this club, this asymmetry of capabilities among the members has enabled China to dominate their internal decisions. Nonetheless, the other members continue to find value in their collaboration with China. In adopting this stance, China within the BRICS presents some echoes of the role played by the United States within the G7.

This chapter examines four ideal types of collective financial statecraft of the BRICS (Brazil, Russia, India, China, and South Africa) in four case studies occurring between 2007 and mid-2016. The first type is inside reforms of existing institutions, illustrated by the BRICS’ attempt to gain greater influence within the International Monetary Fund (IMF) and World Bank. A second type is inside reforms of markets, defined as resisting or reallocating the political power accruing to states that possess currency and financial market power. The associated case profiles the BRICS’ opposition to sanctions against Russia over its intervention in Ukraine. A third type of BRICS collective action occurs via the outside option to create new parallel institutions such as the New Development Bank (NDB) and Contingent Reserve Arrangement (CRA). Finally, a fourth type combines the choice of an outside option with a market-based venue. The chapter examines BRICS support of greater internationalization of China’s currency, rivaling the U.S. dollar and thus altering international financial markets. The BRICS have cooperated successfully in most of their attempts.

Even after seventy-five years, the UN Security Council meets nearly every day. They respond to a range of threats to international peace and security, but not all threats. Why does the Security Council take up some issues for discussion and not others? What factors shape the Council's actions, if they take any action at all? Adapting insights from legislative bargaining, this book demonstrates that the agenda-setting powers granted in the institutional rules offer less powerful Council members the opportunity to in uence the content of a resolution without jeopardizing its passage. The Council also decides when to conduct public or private diplomacy. The analysis shows how external factors like international and domestic public reactions motivate grandstanding behaviors and shape resolutions. New quantitative data on meetings and outside options provide support for these claims. The book also explores the dynamics of the formal analysis in three cases: North Korean nuclear proliferation, the negotiations leading up to NATO bombing in Serbia over Kosovo, and the elected member-led process to codify the principles of the Responsibility to Protect doctrine. The book argues that while the powerful veto members do have great in uence over the Council, the rules of the most consequential security institution in uence its policy outcomes, just as they do in any other international institution.