The Sirens' Call of Relative Gains Concerns

The notion that in international interactions state-actors care not only about their own absolute gains, but also about the size of these gains relative to what other actors receive, is one of the pillars on which rests neorealists' pessimism about the prospects of cooperation in repeated Prisoners' Dilemma (PD) and, by extension, in international politics. Although there has been a lively debate over the impact of relative gains concerns on the prospects of cooperation, the prior question, whether states should in fact care about relative gains at all, has not been seriously confronted. This article questions the assumption that rational states should care about relative gains in PD. As the literature motivates them, relative gains concerns are best understood as a heuristic device designed to guide states toward inter-temporal optimization of their absolute payoffs. Using simulated tournaments of a model of a dynamic, multi-player PD, this article puts to the test whether relative gains concerns in fact achieve this purpose. Contrary to what has been presumed, the analysis demonstrates that in many contexts it is harmful and dangerous for states to care about relative gains. Furthermore, whenever states are in a position to tell whether, in a particular setting, it might be rational for them to care about relative gains, the heuristic of relative gains concerns is redundant. The important issues that the literature on relative gains has sought to address should continue to be discussed, but not through the lens of the problematic and misleading conceptual apparatus of relative gains concerns

Dilemma · Economics · Epistemology · Heuristic · Law and economics · Microeconomics · Political science · Politics · Position (finance · Positive economics · Rationality · Relative price · State (computer science · Computer Science · International Development and Aid · International Relations and Foreign Policy · Law · Political Conflict and Governance