Impact turns + answers – bfhmrs russia War Good

By viewing security alliances as a form of decentralized insurance and focusing on alliance commitments in which aid may cause moral hazard, we make four key findings. First, when two large countries are threatened, they form alliances that exhibit what international relations scholars might call threat balancing. Each side commits to aid the other to a degree that the challenger is deterred from escalating a dispute. Second, the ability of large states to manipulate the incentives of the challenger by making allies more aggressive is a key element to explaining how security commitments arise. In contrast, an alliance of two small country targets fails to deter the challenger, with the result that moral hazard increases the incidence of war and the alliance serves to redistribute the war's costs from the party at war to its ally. But since the cost of war is completely internalized by the target who is not at war, these social welfare-decreasing agreements cannot arise in equilibrium. Third, when analyzing the asymmetric alliance case, we see that alliance agreements always generate private benefits through deterrence for the large country. The formation of an alliance in this environment then turns on the bargaining between the now-safe large country and the still-threatened small country regarding how much of this benefit will be returned in the form of transfers to the small country. Finally, we see that when the risk of a crisis is severe, that is, when ζ is sufficiently large, there is unique equilibrium and we can make strong prediction regarding the bargaining out come between targets. This may explain, in part, why some actual alliance agreements in history have been forged on the eve of a crisis and why they describe in detail the conditions of activation as well as the amount and form of aid.