Why do international institutions vary so widely in terms of such key institutional features as membership, scope, and flexibility? We argue that international actors are goal-seeking agents who make specific institutional design choices to solve the particular cooperation problems they face in different issue-areas. In this article we introduce the theoretical framework of the Rational Design project. We identify five important features of institutions—membership, scope, centralization, control, and flexibility—and explain their variation in terms of four independent variables that characterize different cooperation problems: distribution, number of actors, enforcement, and uncertainty. We draw on rational choice theory to develop a series of empirically falsifiable conjectures that explain this institutional variation. The authors of the articles in this special issue of International Organization evaluate the conjectures in specific issue-areas and the overall Rational Design approach.

Scholars and observers of the international system often comment on the decreasing importance of international boundaries as a result of the growth of international economic and social exchanges, economic liberalization, and international regimes. They generally fail to note, however, that coercive territorial revisionism has markedly declined over the past half century—a phenomenon that indicates that in certain ways states attach greater importance to boundaries in our present era. In this article I first trace states' beliefs and practices concerning the use of force to alter boundaries from the birth of the Westphalian order in the seventeenth century through the end of World War II. I then focus on the increasing acceptance of the norm against coercive territorial revisionism since 1945. Finally, I analyze those instrumental and ideational factors that have influenced the strengthening of the norm among both Western and developing countries.

Three perspectives dominate debate over the relationship between globalization and the welfare state in industrialized countries: that globalization constrains the welfare that hitherto legitimated openness, that globalization still sparks demands for welfare while opening few forces to flee or fight against it, and that openness has little effect on welfare. A closer look at the “globalization” and “welfare” aggregates on which most scholars focus, however, reveals varying politics connecting different elements of globalization and welfare that may help reconcile this debate. First, compared to general trade openness, low-wage competition may spark stronger pressure to expand and less pressure to constrain welfare compensation. Second, all kinds of openness affect vulnerable and thriving groups in ways that differ across social policies, especially training and relocation benefits compared to benefits for youth dependents and the elderly. Consequently, different faces of openness may spark predictably different politics that spur some aspects of welfare, retrench others, and have little effect on still others. Panel data for eighteen OECD countries supports this argument.

Domestic political conflict has been a constant companion to international trade, but the nature of that conflict has varied greatly in Western democracies over the last two centuries. Political battles over trade policy appear to have sometimes divided societies along broad class lines and at other times split them into narrow industry-based coalitions. I argue that this diversity stems from historical and cross-national variation in inter-industry factor mobility. Class coalitions are more likely where factor mobility is high, whereas narrow, industry-based coalitions are more likely where mobility is low. Evidence from six Western economies for the last two centuries indicates that levels of factor mobility have varied historically and cross-nationally in accord with industrialization and regulation. This variation corresponds broadly with observable differences in the formation of trade policy coalitions.

The 350th anniversary of the Peace of Westphalia in 1998 was largely ignored by the discipline of international relations (IR), despite the fact that it regards that event as the beginning of the international system with which it has traditionally dealt. By contrast, there has recently been much debate about whether the “Westphalian system” is about to end. This debate necessitates, or at least implies, historical comparisons. I contend that IR, unwittingly, in fact judges current trends against the backdrop of a past that is largely imaginary, a product of the nineteenth- and twentieth-century fixation on the concept of sovereignty. I discuss how what I call the ideology of sovereignty has hampered the development of IR theory. I suggest that the historical phenomena I analyze in this article—the Thirty Years' War and the 1648 peace treaties as well as the post–1648 Holy Roman Empire and the European system in which it was embedded—may help us to gain a better understanding of contemporary international politics.

The decision of the European Union to expand to Central and Eastern Europe is a puzzle for rationalist intergovernmentalism. This approach to the study of European integration accounts for most of the preferences of the state actors and many characteristics of the intergovernmental bargaining process but fails to explain why it resulted in the opening of accession negotiations. I introduce the mechanism of rhetorical action in order to show how the supporters of enlargement succeeded in overcoming the superior material bargaining power of their opponents. Through the strategic use of arguments based on the liberal norms of the European international community, the “drivers” caught the “brakemen” in the community trap and, step by step, shamed them into acquiescing in Eastern enlargement.

Barbara Koremenos, Charles Lipson, and Duncan Snidal conjecture that the conditions of membership in international institutions will grow more restrictive as a response to uncertainty about state preferences. Membership criteria will act as a signaling device—states more committed to cooperation will be willing to meet the criteria, whereas those less committed to cooperation will not. The recent enlargement of NATO to include the former Warsaw Pact members Poland, Hungary, and the Czech Republic illustrates this logic. The potential candidates for admission had to meet standards with respect to democratization, civilian control over the military, and the resolution of border and ethnic disputes with neighbors. These criteria served to identify the more cooperative potential members and to encourage cooperative behavior among those who aspired to membership. However, NATO enlargement came at a price. Although trust was built and cooperation fostered between the East European states that gained membership, trust was broken and cooperation harmed between NATO and Russia. This unfortunate outcome represents a dilemma that arises in the expansion of a security community: While expanding the security community enlarges the zone of peace and mutual trust, it may generate fear among those still on the outside, who view it as a potentially hostile alliance. I present a game-theoretic analysis of this dilemma and analyze the conditions under which it arises.

Why do agents comply with the norms embedded in regimes and international institutions? Scholars have proposed two competing answers to this compliance puzzle, one rationalist, the other constructivist. Rationalists emphasize coercion, cost/benefit calculations, and material incentives; constructivists stress social learning, socialization, and social norms. Both schools, however, explain important aspects of compliance. To build a bridge between them, I examine the role of argumentative persuasion and social learning. This makes explicit the theory of social choice and interaction implicit in many constructivist compliance studies, and it broadens rationalist arguments about the instrumental and noninstrumental processes through which actors comply. I argue that domestic politics—in particular, institutional and historical contexts—delimit the causal role of persuasion/social learning, thus helping both rationalists and constructivists to refine the scope of their compliance claims. To assess the plausibility of these arguments, I examine why states comply with new citizenship/membership norms promoted by European regional organizations.

The internationalization and globalization of capital markets greatly complicates the tasks of national financial regulators. It is becoming increasingly difficult, if not impossible, to regulate the activities of banking and securities firms and the broad range of transactions in which they engage on a national level. In this article I explore the process of international regulatory harmonization in capital markets, focusing especially on the mechanisms (political pressure, market pressure, and institutional arrangements) that facilitate this process. I argue that the United States and the United Kingdom are dominant players in the capital market and that the factors most relevant for understanding harmonization processes are (1) whether other jurisdictions have incentives to emulate the regulatory innovations of the dominant financial centers, and (2) whether the dominant centers experience negative externalities in the process. These two factors shed considerable light on whether harmonization will be spurred primarily by market forces or by politics; they also suggest the likely role of international institutions in the process of regulatory harmonization. The argument is illustrated using four issue areas: capital adequacy requirements for banks, anti-money laundering rules, accounting standards, and information sharing among securities regulators.

How can states credibly make and keep agreements when they are uncertain about the distributional implications of their cooperation? They can do so by incorporating the proper degree of flexibility into their agreements. I develop a formal model in which an agreement characterized by uncertainty may be renegotiated to incorporate new information. The uncertainty is related to the division of gains under the agreement, with the parties resolving this uncertainty over time as they gain experience with the agreement. The greater the agreement uncertainty, the more likely states will want to limit the duration of the agreement and incorporate renegotiation. Working against renegotiation is noise—that is, variation in outcomes not resulting from the agreement. The greater the noise, the more difficult it is to learn how an agreement is actually working; hence, incorporating limited duration and renegotiation provisions becomes less valuable. In a detailed case study, I demonstrate that the form of uncertainty in my model corresponds to that experienced by the parties to the Nuclear Non-Proliferation Treaty, who adopted the solution my model predicts.

International institutions that include an escape clause generate more durable and stable cooperative international regimes and are easier to achieve ex ante. The escape clause is endogenous in a model of repeated trade-barrier setting in the presence of symmetric, two-sided, political uncertainty. They permit, along the equilibrium path, countries to temporarily deviate from their obligations in periods of excessive, unexpected political pressure at some prenegotiated cost. The architects of international agreements optimally choose a cost so that escape clauses are neither too cheap to use (encouraging frequent recourse, effectively reducing the benefits of cooperation) nor too expensive (making their use rare and increasing the chance of systemic breakdown). The international institution's crucial role is to provide information, verifying that the self-enforcing penalty has been paid (voluntarily), rather than to coerce payment. Escape clauses also make agreements easier to reach initially. Their flexibility reassures states that the division of the long-term gains from the agreement is not immutable.

I develop a systematic argument about the politics of the 1997–98 Asian economic crisis. I focus on institutions—specifically, the connection linking the institutional framework of national politics, the policy environment, and investment. I seek to resolve the tension between the literatures on credible policy commitment and policy flexibility, arguing that if either is severely undersupplied, the risk associated with the policy environment rises rapidly for investors. Building on a veto player framework, I develop a simple model of a U-shaped relationship between the number of veto players in a political system and policy risk to investors. Institutional vetoes on executive authority lower policy risk for investors but only up to a point, after which additional veto players promote unwelcome policy rigidity. I illustrate this using four cases: Thailand, the Philippines, Malaysia, and Indonesia, the four main Southeast Asian countries involved in the financial crisis. I argue that the institutional framework of national politics had a powerful and predictable influence on policy responses and investor reactions.

Though substantively important, centralized negotiations have received less theoretical attention than problems of centralized monitoring and enforcement. I address this gap by examining variation in a particular form of centralized negotiations that I call “clustering.” Clustering occurs when a state negotiates with several other states at the same time. Clustering enables states to avoid having to make concessions on the same issue to one state after another, and therefore has important distributional advantages. Clustering also centralizes bargaining within a regime, especially when several states cluster simultaneously in a “macro-cluster.”

I propose several hypotheses about clustering. First, most-favored-nation (MFN) clauses are a necessary condition for clustering. They link the distributional conflicts among many pairs of countries and make centralized bargaining more likely. Second, increasing membership in the trade regime makes clustering more likely. This relationship between membership and centralization echoes Rational Design conjecture C3, centralization increases with number, though the causal mechanism differs significantly. Third, clustering provides distributional advantages to those who cluster. A state that clusters, such as France under the Méline tariff or Germany under Chancellors Leo von Caprivi and Bernard von Bülow, will make fewer concessions than one that does not.

I illustrate the accepted, though hardly researched, idea that political institutions play a role in locking in factor specificity across sectors, space, and borders. I use the emergence of modern capital markets in the nineteenth century, a process that threatened to redeploy financial resources away from land and traditional sectors to heavy industry, as a test case to ascertain the degree of domestic financial capital mobility in nine advanced industrialized countries. The main finding is that cross-national variations in financial capital mobility, holding constant the level of economic development, reflect the degree of state centralization.

States defend norms in some cases but not in others. Understanding this variation sheds light on both U.S. foreign policy and the role of normative reasoning. We report the results of four experiments embedded in a survey of U.S. elites. The experiments identified the effects of felt normative obligation (that is, the logic of what is appropriate) and concern for U.S. economic and security interests (that is, the logic of utilitarian consequence) as well as the role played by individual perceptions. We find that perceptions of another actor's motivation, of conflicts as civil or cross-border wars, and of the democratic nature of victims affect decisions to defend a prescriptive norm. This finding means that theories of international relations that feature norms as structural concepts need to consider actor-level cognition when examining the operation of norms. Moreover, we find that when U.S. economic and security interests are at stake there is a much greater inclination to defend norms than when simply normative obligation is present. Most U.S. elites appear to treat the presence or absence of U.S. material interests as a legitimate criterion for deciding whether or not to defend an international prescriptive norm.

Has foreign aid destroyed state institutions in Africa? African states depend on development assistance to conduct basic government operations, yet few of these states are well governed or effective at providing public goods. The two trends, mounting foreign aid and static or diminishing state performance, raise an obvious question: Is aid dependency contributing to misrule and state failure in Africa? Many critics argue the two phenomena are related. I find they are not. My analysis fails to show a negative association between aid receipts and two measures of democracy and economic freedom. Instead, the evidence is consistent with a small, positive relationship between aid and these indicators of state performance. Since the international community seems bent on reducing foreign aid, an important issue is how African states can maintain and improve their performance with less foreign assistance.

States experiencing negative externalities caused by other states' behaviors have incentives to devise international institutions to change those behaviors. The institutions states create to counter incentives to defect vary in whether and how they expand institutional scope to accomplish that goal. When facing symmetric externalities, states tend to devise narrow institutions based on issue-specific reciprocity. When facing asymmetric externalities, or upstream/downstream problems, states tend to broaden institutional scope using linkage strategies. When victims of an externality are stronger than its perpetrators, the resulting institutions, if any are devised, are likely to incorporate the negative linkage of sanctions or coercion. When victims are weaker, exchange institutions relying on the positive linkage of rewards are more likely. We illustrate the influence of situation structure on institutional design with three cases: international whaling, ozone-layer depletion, and Rhine River pollution.

From the notorious “killing fields” of Cambodia to programs of “ethnic cleansing” in the former Yugoslavia and Rwanda, the grizzly nature of ethnic and identity-centered conflict incites horror, outrage, and a human desire for justice. While the drive to humanize warfare can be traced to the writing of Hugo Grotius, current efforts to establish an atrocities regime are unparalleled in modern history. Combining approaches in international relations theory and international law, I examine the role political factors (norms, power and interests, institutions) and legal factors (precedent and procedure) play in the development of an atrocities regime. International tribunals have convicted generally low-level war criminals in both Rwanda and the former Yugoslavia, but they have had much more limited success in achieving their more expansive goals—deterring atrocities and fostering national reconciliation in regions fraught with ethnic violence. This analysis reveals additional institutional modifications needed to construct a more effective regime and highlights the importance of placing this new regime within a comprehensive international strategy of conflict management.

The international community, in its efforts to overcome the security dilemmas that inhibit conflict resolution, need not always offer forceful security guarantees to combatants in civil wars. We argue that noncoercive, liberal international intervention can end civil wars. As suggested by a constructivist perspective and the insights of the democratic peace, the promotion of liberal democracy can successfully resolve civil wars by transforming the identities and institutions of the combatants. We develop this argument by examining the resolution of civil wars in Central America during the 1990s. Of the Central American cases, Nicaragua, the country subject to the strongest security guarantees, has been the least stable of the three. El Salvador and Guatemala, in contrast, have experienced more successful conflict resolution despite the lack of any forceful security guarantees by the international community. The termination of these civil wars can be best explained by the adherence of local actors to liberal democratic norms and institutions in response to a variety of international pressures and opportunities.

We present a unified model of the politics of the European Union (EU). We focus on the effects of the EU's changing treaty base (from the Rome to Amsterdam Treaties) on the relations among its three supranational institutions—the Commission of the European Communities, the European Court of Justice, and the European Parliament—and between these actors and the intergovernmental Council of Ministers. We analyze these institutional interactions in terms of the interrelationships among the three core functions of the modern state: to legislate and formulate policy (legislative branch), to administer and implement policy (executive branch), and to interpret policy and adjudicate disputes (judicial branch). Our analysis demonstrates that the evolution of the EU's political system has not always been linear. For example, we explain why the Court's influence was greatest before the passage of the Single European Act and declined in the following decade, and why we expect it to increase again in the aftermath of the Amsterdam Treaty. We also explain why the Commission became a powerful legislative agenda setter after the Single European Act and why its power today stems more from administrative discretion than from influence over legislation.