Cognitive bargaining model an analysis tool for third party incentives?

Abstract

Although threats and punishments have historically been the more prevalent tools of U.S. foreign policy, the current U.S. administration is signaling a reorientation toward a more positive inducement strategy. Much is written on incentives, but few have taken an in depth look at how third parties should properly place incentives to maximize their effect. This thesis suggests that a cognitive bargaining model may provide a useful analysis tool for deciding when and where to use positive incentives. The model proposed in this thesis uses James Fearon's rational bargaining and war theory as a base. Then, by folding in Prospect Theory, a bargaining model is developed that can account for the effects of third party incentives. This model is put to the test by looking at Ukraine's denuclearization in the early 1990s. Using the cognitive bargaining model as a framework, Ukraine's bargain reached via the Lisbon Protocol in 1992 is compared to the one achieved in the 1994 Trilateral Agreement. This thesis finds that the cognitive bargaining model provides a useful analysis tool, and recommends further development of this model so that future offers of incentives by the United States achieve the most "bang for the buck."