POLICY UNCERTAINTY IN 2-LEVEL GAMES - EXAMPLES OF CORRELATED EQUILIBRIA

Recent research on two-level game models emphasizes the close interact ion between the domestic and foreign policies of states, but these sta tes are usually interpreted as unitary rational actors and these two p olicy arenas are generally kept separate. We develop integrated models of multi-level policy games in which the locus of strategic action re mains at the individual (or group) level. Social choice theory identif ies fundamental dilemmas associated with assuming that states have con sistent preferences, yet empirical observation reveals that domestic p olitical competition results in regularized patterns of behavior at th e state and international levels. In our models the expectations of in dividual Bayesian policy actors converge to a ''correlated equilibrium '' that defines a probability distribution over domestic and foreign p olicy outcomes. We compare examples of correlated equilibria in a Chic ken game between two unitary rational states, a voting game among thre e domestic groups, and a two-level game in which each state's foreign policy is determined by this voting game. By focusing on the collectiv e consequences of the strategic inter-actions of Bayesian rational ind ividuals, this synthesis of game, social choice, and Bayesian decision theories highlights fundamental linkages among the regularities obser ved in domestic politics, foreign policy, and international relations.