GOOD TIMES, BAD TIMES, AND THE DIVERSIONARY USE OF FORCE - A TALE OF SOME NOT-SO-FREE AGENTS

It is commonly asserted that state leaders, when faced with poor domes tic political conditions, have an incentive to engage in diversionary foreign policy behavior. The standard view is that an aggressive forei gn policy benefits the executive by leading the public to ignore domes tic problems and to ''rally around the flag'' to meet the foreign thre at. In this article, the authors formalize the diversionary argument a s a principal-agent problem in which the state executive is an agent u nder contract to a public whose choice to retain or dismiss the execut ive is based on whether the agent is judged to be competent. The autho rs assume that the competence of the executive is private information and that the public makes Bayesian updates of the probability of execu tive competence based on domestic and foreign policy outcomes. Several implications are derived from the model. First, the competence of exe cutives and their attitudes toward risk are central in the decision to engage in diversionary foreign policy. Second, an executive often can improve her or his chances of being retained only by altering the pub lic's perception of the difficulty of the foreign operation. Third, th e model points to the need to distinguish between short-term rally-aro und-the-flag effects of diversion and the public's long-term assessmen t of executive competence.