Lending Credibility: The International Monetary Fund and the Post-Communist Transition

By Randall W. Stone | Go to book overview

2
A Formal Model of Lending Credibility

THIS CHAPTER presents the main argument of the book in the form of a gametheoretic model. Game-theoretic modeling is a powerful tool, but it comes with a significant drawback: The predictions of a model are only as good as the assumptions that go into it. For example, the model can say nothing about whether the utility functions attributed to the players accurately reflect the values and priorities of real actors, or whether the parameters of the model accurately reflect the strategic situation they face. There are numerous, important questions about which game theory can tell us nothing at all. If its limitations are kept firmly in mind, however, game theory can help us to build more rigorous arguments than would otherwise be possible about a particular class of phenomena that play an important role in politics: strategic interactions. I develop a formal game-theoretic model because the strategic interaction between the IMF and borrowing countries is complex, and game theory is the most appropriate tool for analyzing the factors that are most important: credibility, market expectations, reputation, and information.

Formal theory must be empirically informed in order to be empirically relevant. While it is not technically feasible to model all the nuances of complex international interactions, I strive for a particular kind of realism: I seek to focus attention on the strategic variables that are empirically most important.1 Consequently, my model is tested against extensive interviews with Russian, Ukrainian, Polish, and Bulgarian officials and their negotiating partners in the IMF. In a break with much work in formal theory, I consider it a valid criticism of my model if the strategies that it calls for do not seem realistic to the agents who would be required to implement them. Furthermore, I have worked

____________________
1
Robert Powell describes this approach as a “modeling dialogue,” in which the analyst uses contextual knowledge to improve models to better reflect empirical situations. The problem, of course, is circularity: If the data go into the model, they cannot be used to test it. The only solution is out-of-sample testing. In the case of this project, the key features of the model were derived from a case study of Russian relations with the IMF from 1992 to 1996 (Stone 1999). The portion of my Russian case study based on interviews conducted through 1997, therefore, can only be regarded as an illustration of the theory, not a test. The next four years in Russia, the other case studies and the quantitative tests, on the other hand, are out-of-sample tests of the model's predictions.

-15-

Notes for this page

Add a new note
If you are trying to select text to create highlights or citations, remember that you must now click or tap on the first word, and then click or tap on the last word.
One moment ...
Project items

Items saved from this book

This book has been saved
Highlights (0)
Some of your highlights are legacy items.

Highlights saved before July 30, 2012 will not be displayed on their respective source pages.

You can easily re-create the highlights by opening the book page or article, selecting the text, and clicking “Highlight.”

Citations (0)
Some of your citations are legacy items.

Any citation created before July 30, 2012 will labeled as a “Cited page.” New citations will be saved as cited passages, pages or articles.

We also added the ability to view new citations from your projects or the book or article where you created them.

Notes (0)
Bookmarks (0)

You have no saved items from this book

Project items include:
  • Saved book/article
  • Highlights
  • Quotes/citations
  • Notes
  • Bookmarks
Notes
Cite this page

Cited page

Style
Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

(Einhorn, 1992, p. 25)

(Einhorn 25)

1

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Cited page

Bookmark this page
Lending Credibility: The International Monetary Fund and the Post-Communist Transition
Settings

Settings

Typeface
Text size Smaller Larger
Search within

Search within this book

Look up

Look up a word

  • Dictionary
  • Thesaurus
Please submit a word or phrase above.
Print this page

Print this page

Why can't I print more than one page at a time?

Full screen
/ 286

matching results for page

Cited passage

Style
Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn, 1992, p. 25).

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn 25)

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences."1

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Cited passage

Welcome to the new Questia Reader

The Questia Reader has been updated to provide you with an even better online reading experience.  It is now 100% Responsive, which means you can read our books and articles on any sized device you wish.  All of your favorite tools like notes, highlights, and citations are still here, but the way you select text has been updated to be easier to use, especially on touchscreen devices.  Here's how:

1. Click or tap the first word you want to select.
2. Click or tap the last word you want to select.

OK, got it!

Thanks for trying Questia!

Please continue trying out our research tools, but please note, full functionality is available only to our active members.

Your work will be lost once you leave this Web page.

For full access in an ad-free environment, sign up now for a FREE, 1-day trial.

Already a member? Log in now.