Assessing State Preferences and Explaining Institutional Choice: The Case of Intra-German Trade

Abstract

A solid knowledge about states' interests in the case under investigation is required to reinforce the neoinstitutionalist hypothesis that international institutions are built to reap joint gains in issue areas in which uncoordinated activities may lead to a suboptimal outcome. However, most neomstitutionalists who apply game theory to international politics seem to assume that, regardless of the outcome to be explained, no case-specific empirical assessment of actors' interests is needed to understand regime formation. This article aims to empirically assess the constellation of state interests on the basis of which the intra-German trade regime came into existence. Furthermore, solution concepts are used merely as indicators for describing a situation, they are not taken as unqualified predictions of what will happen. This application of game theory still proves useful. By demonstrating that the intra-German trade regime emerged from a constellation of interests resembling a prisoner's dilemma, the neorealist argument that international institutions are unable to regulate important issues in a really competitive relationship is challenged. At the same time, the article points to at least one necessary addition to the neoinstitutionalist argument, as the explanation of given international institutions requires a two-step procedure: first, the explanation of state interests, and second, the explanation of behavior brought to light on the basis of these interests.