The dilemma of informal governance with outside option as solution

Abstract

The efficiency-oriented part of the literature on informal governance points to institutional costs as a reason for governments to prefer to cooperate with each other through commitments that are not binding. Left unexplained is what I call the dilemma of informal governance: how informal governance copes with the problem of cheating, to which formal governance has traditionally provided the solution. I show that like-mindedness, the current solution to the dilemma, is convincing but underspecified. Working from a model of governance encompassing the three time-honored dimensions of obligation, precision, and delegation, I analytically explore two other solutions, one that fails, information transmission, another that works, outside option, which I borrow from the power-oriented part of the literature on informal governance. A key finding is that informal governance, despite being neither self-enforceable nor informative, is sustainable for mild Prisoner’s Dilemma (PD) types in the presence of outside options. I illustrate the model findings by tracing an historical correlation between power polarization and formalism in the design of security regimes.

Cooperation under autonomy: Building and analyzing the Informal Intergovernmental Organizations 2.0 dataset

“…States are increasingly turning to IIGOs as their advantages and the limitations of FIGOs have become more apparent over time (Verdier, 2015).…”

“…Improved electronic communications starting in the 1980s and 1990s have made informal cooperation more feasible as a means to coordinate states (Manulak & Snidal, 2020). States are increasingly turning to IIGOs as the advantages and the limitations of FIGOs have become more apparent over time (Verdier, 2015).…”

Policy networks for European internal security governance: toward a more systematic empirical and normative assessment

“…12 Frevel and Schulze [28]. 13 Verdier [77], Kleine [44], Pauwelyn et al [61], Christiansen and Neuhold [11], Stacey [70]. 14 List and Zangl [49].…”

The global governance of international development: Documenting the rise of multi-stakeholder partnerships and identifying underlying theoretical explanations

“…To be sure, powerful states may have some incentives to formalize cooperation-for instance as a credible commitment device (Ikenberry 2001;Rodrik 1995;Stone 2011). However, they will concede to powerless states on secondary issues at best (Stone 2011;Verdier 2015;Voeten 2001). Powerful states for the most part prefer informal designs and non-legally binding agreements (Thompson 2009).…”

“…Functionalism posits that states create international institutions whose design reflects the functions they are supposed to deliver (Abbott and Snidal 1998;Haas 1964;Koremenos 2016;Koremenos, Lipson, and Snidal 2001). Power-oriented approaches posit that institutional designs reflect the interests of the most powerful states (Gruber 2000;Mearsheimer 1994;Stone 2013;Verdier 2015). Domestic politics relates design choices at the international level to the political incentives of governments at home, specifically participatory governance structures and norms that provide non-state actors with access to policy-making and implementation (Andonova 2014; Andonova, Hale, and Roger 2017;Remmer 2002;Westerwinter 2019d).…”