The Prisoners' Dilemma and Regime-Switching in the Greek-Turkish Arms Race

Journal of Peace Research, Vol. 37, pp. 737-750, 2000

Posted: 7 Dec 2004

See all articles by Ron Smith

Ron Smith

Birkbeck College

Martín Sola

Universidad Torcuato Di Tella; University of London - Economics, Mathematics and Statistics

Fabio Spagnolo

Brunel University London - Economics and Finance

Abstract

Despite intensive investigation, little evidence has been found for a traditional Richardson style arms race between Greece and Turkey using regression methods. This paper uses an alternative model of the arms race, which treats it as a simple repeated two by two game like Prisoners' Dilemma, in which each country can choose a high or low share of military expenditure. This gives four possible states: both high; Greece high Turkey low; Turkey high Greece low; both low. The strategies of each country, the choice probabilities given the current state, are then estimated using a discrete state regime-switching model, which estimates the transition probabilities between the four states. Various hypotheses about these strategies are tested as restrictions on these transition probabilities. One set of hypotheses is that the countries play 'tit-for-tat' doing what their opponent did in the previous period. This is rejected for both countries. Another hypothesis is that each country plays independently. Each country has its own probabilities of switching between high and low, which do not depend on whether the other country is high or low. This hypothesis is accepted by the data. The estimates of the transition probabilities suggest that the states, high or low shares of military expenditure, are very persistent, with very high probabilities of staying in them. The estimates are not consistent with a traditional 'external' action-reaction explanation of shares of military expenditure, but are more consistent with 'internal' explanations which emphasise bureaucratic and political inertia.

Suggested Citation

Smith, Ron P. and Sola, Martín and Spagnolo, Fabio, The Prisoners' Dilemma and Regime-Switching in the Greek-Turkish Arms Race. Journal of Peace Research, Vol. 37, pp. 737-750, 2000. Available at SSRN: https://ssrn.com/abstract=626855

Ron P. Smith (Contact Author)

Birkbeck College ( email )

Malet Street
London WC1E 7HX
United Kingdom
+44 207 631 6413 (Phone)
+44 207 631 6416 (Fax)

Martín Sola

Universidad Torcuato Di Tella ( email )

Minones 2159
1428 Buenos Aires, 1428
Argentina
5411 4784 0080 (Phone)
5411 4784 9807 (Fax)

University of London - Economics, Mathematics and Statistics ( email )

Malet Street
London, WC1E 7HX
United Kingdom
+44 20 7631 6411 (Phone)
+44 20 7631 6416 (Fax)

HOME PAGE: http://www.econ.bbk.ac.uk/faculty/sola/

Fabio Spagnolo

Brunel University London - Economics and Finance ( email )

Uxbridge UB8 3PH
United Kingdom
+44 1895 816383 (Phone)
+44 1895 203303 (Fax)

HOME PAGE: http://www.brunel.ac.uk/depts/ecf/Staff/SpagnoloF/Main.htm

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