POLICY COOPERATION AMONG THE STATES - THE CASE OF INTERSTATE BANKING REFORM

In a competitive environment, why do states sometimes choose policy co operation over conflict? An analysis of the issue of interstate bankin g deregulation for the period 1982-88 reveals that states will make of fers of cooperation based on a history of cooperation, geographic prox imity, and the desire to advantage themselves relative to the other st ates. History and geographic proximity remain significant predictors o f actual policy agreement, but the fact that policy agreement becomes more likely only when both states have reason to perceive the benefits as outweighing the possible risks reveals the political nature of gam e playing among the American states. Thus, this study shows the power of game theory metaphors for studying policymaking, while reminding us that each issue has its own specific political and historic context t hat shapes the strategies of the actors involved.