Assessing competing defense postures: the strategic implications of "flexible response."

The concept of flexible response, originally formulated by NATO, can be traced to the dissatisfaction of some strategic thinkers with the Eisenhower administration's New Look defense policy and its implementation in the doctrine of massive retaliation. Critics charged that New Look, stressing as it did "more bang for the buck," placed undue reliance on strategic weapons to deter Soviet aggression in Europe and elsewhere, leaving little room for maneuver during periods of acute crisis.(1) To avoid the stark choice of all-out nuclear war or capitulation, they proposed that United States conventional forces be strengthened and augmented with an arsenal of tactical nuclear weapons.

When the Democrats came to power in 1961, these changes were pursued under the policy labeled flexible response. After extensive debate and compromise, NATO formally adopted flexible response in 1967.(2) Today, even as it moves toward a new deployment policy reflecting recent dramatic changes in Eastern Europe and the former Soviet Union, NATO continues to maintain both a tactical and a strategic capability.

This is not to suggest that flexible response is a well-articulated policy. In fact, Daalder argues that NATO deployments have been "deliberately ambiguous" in order to mask "differences among the allies concerning the role and relative weight to be accorded to theater nuclear forces in support of [its extended deterrence] strategy."(3) Consequently, there are a number of competing defense postures, all of which claim consistency with NATO'S loosely articulated declaratory policy.(4)

In this paper we model the strategic relationship implied when one state adopts a deployment policy--such as flexible response--that permits a range of credible responses to a probe or challenge. We then contrast this relationship with one that relies instead on strategic weapons and a more restricted set of response options associated with them. With this model we offer a new and explicit evaluation of rival flexible response policies, identifying when and how substrategic deployments make limited war possible and total war less--or more--likely. The goal ultimately is to gauge the policy implications of various mixes of tactical and strategic weapons.

One might object that the demise of the Warsaw Pact, the disintegration of the Soviet Union, and the consequent reorientation of NATO itself render the present model a historical curiosity. We think not. Our model is not limited to nuclear situations, nor are any restrictions placed on player preferences that confine its empirical domain to the superpower relationship. In fact, as we argue below, the model is applicable to any situation, nuclear or otherwise, in which the players believe that certain response options are qualitatively different from others and that the choice of these options involves a serious escalation of the conflict. For instance, the model could apply to a relationship, such as Iran and Iraq's, in which chemical weapons play a role, or to a relationship like Greece and Turkey's, in which invasion is an enormous concern but only conventional weapons are realistically involved. Other examples abound.

I. ASSUMPTIONS AND PREVIOUS RESEARCH

To explore the strategic relationships implied by a flexible response deployment policy, we begin,with the Asymmetric Escalation Game, a generic asymmetric two-stage escalation model, shown in Figure 1. In so doing, we assume that a status quo outcome (cc) exists, and that one player, Challenger (Ch), must decide (at Node 1) whether to cooperate (C) and accept it, taking no aggressive action, or to defect (D) and attempt to overturn it.(5) In this model Challenger could defect by precipitating a crisis, by launching a conventional military attack, or by taking some aggressive action other than a direct strategic nuclear assault.(6) Note that it is precisely this broad range of substrategic challenges that flexible response options are designed to prevent.

[Figure 1 ILLUSTRATION OMITTED]

If Challenger supports the status quo, the game ends at cc and the payoffs to Challenger and the other player, Defender (Def), are ([c.sub.CC],[d.sub.CC]), respectively. (The notation for the players' payoffs at the other outcomes is similar.)

But if Challenger chooses to defect, Defender must select (at Node 2) one of three alternatives: concede (C) to Challenger's demand by doing nothing; defy (D) Challenger by responding in kind; or escalate (E) the conflict. Defender's choice of c ends the game (at outcome DC), while the choice of D or E leads to a second move for Challenger (Nodes 3a or 3b, respectively): either concede (C) by sticking with its prior action choice, thereby engaging Defender at a restrained level of conflict (outcome DD or DE), or escalate. If at the previous move Defender had selected D, escalation by Challenger provides Defender with an additional opportunity to concede (outcome ED) or (counter-) escalate (Node 4). As Figure 1 shows, the game ends if there is no challenge, or if some player backs down by choosing C, or as soon as both players escalate (outcome EE).(7)

Note that the Asymmetric Escalation Game provides an escalation model that applies to any situation in which the defender may decide to respond by crossing a threshold, thereby inducing a (psychologically) distinct level of conflict.(8) For example, the lower level of conflict could be thought of as conventional, and the higher as nuclear; or the distinction could rest on a perceived difference between tactical (theater) and strategic nuclear weapons; or there could be some other mutually understood boundary. The model applies whenever the two actors concur that there exists a saliency (in the sense of Schelling)(9) and that crossing this barrier--whether real or psychological--represents a serious escalation of the conflict. Like NATO'S description and implementation of its flexible response deployment, then, the model is "deliberately ambiguous" about the nature of Defender's limited-response option.

In this context, it is important to point out that the sequence of choices we postulate can lead to two distinct symmetric conflict outcomes--limited conflict at outcome DD, and all-out conflict at outcome EE. This possibility distinguishes the Asymmetric Escalation Game from other game-theoretic models of interstate escalation, and it enables us to offer a more realistic assessment of the conditions associated with successful extended deterrence.(10) Our objective is to gain insight into the precise set of circumstances in which substrategic deployments make limited war possible and total war either more or less likely. Additional levels of deployment are possible but might reduce tractability without substantially improving verisimilitude, in view of the severely limited vocabulary of credible signals available to states.(11) Note that the model is not meant to apply to deterrence relationships in which high-level initiations are salient.(12)

Like most other recent attempts to model the escalation process, we postulate players with incomplete information. In our model, the principal source of uncertainty is each player's lack of information about the other's relative preference between certain critical outcomes that we identify below. We relate this uncertainty to the credibility of each player's final stage escalation threat. This connection allows us to explore the relationship between threat credibility and the dynamics of escalation; it also distinguishes our model from those models that postulate players who know each other's preferences but are uncertain about the consequences of their actions.(13) This approach, we believe, bypasses the credibility problem associated with thermonuclear war because it assumes that all endgame escalation threats run counter to the interests of the players and are imposed probabilistically by "nature."(14) Rather than prejudging the question, our model permits analysis of the strategic implications of any configuration of credible threats. This is not to say that we hold that nature plays no role in the way conflicts evolve; rather, we assume that the risks associated with war and other conflict outcomes are reflected in the prayers' preferences. In other words, we ask what rational players do in the uncertain and risky environment characteristic of superpower crises.

To explore the strategic implications of a flexible response deployment policy, we make several assumptions about the preferences of the players. First, we assume that Challenger always strictly prefers DC to CC; that is, it prefers to initiate given that Defender does not respond. This assumption provides Challenger with an immediate incentive to upset the status quo.

Next, we assume that once conflict has been initiated, Defender prefers to respond in kind rather than capitulate (that is, prefers DD to DC). This assumption is consistent with the stated rationale of flexible response: to provide a defender with a credible substrategic response to a challenge.(15) Or as Helmut Schmidt put it in his argument for a strong conventional defense capability in Europe: NATO must... have troops and weapons on a scale ample to make non-nuclear aggression appear hopeless, and sufficient in an emergency to force one of two courses on the aggressor--to halt or to extend the conflict."(16) Note that it is precisely this choice that Challenger faces at Node 3a after Defender chooses to respond in kind at Node 2.

Similarly, we assume that Defender prefers to escalate (that is, prefers DE to DD and therefore to DC), provided that Challenger does not respond by also choosing E. To be sure, this is a strong assumption. We make it, however, to explore those situations in which the incentive to escalate is strongest. As well, this premise is implicit in a massive retaliation or a flexible response deployment policy: under massive retaliation, it is plainly required; likewise, flexible response presents no genuine choice of responses without it. Under flexible response, the critical question is which response option Defender would choose in light of Challenger's capability to counterescalate. We consider this question below.

To model aversion to the costs and risks of conflict, we assume that each player prefers to gain the upper hand or, if it must, lose the advantage at the lowest possible level of conflict. Thus, for instance, Challenger prefers payoff DC to ED, and so does Defender. We further as sume that the status quo (CC) is the highest ranked outcome for Defender, and second only to unilateral defection (DC) for Challenger.

Taken together, these assumptions restrict the players' utilities as follows:

Challenger: [c.sub.DC] > [c.sub.CC] > [c.sub.ED]

> [c.sub.DD] > [[c.sub.EE] and [c.sub.DE]]

Defender: [d.sub.CC] > [d.sub.DE] > [d.sub.DD]

> [d.sub.DC] > [[d.sub.EE] and [d.sub.ED]]

where "[is greater than]" means "is greater than." For now, we leave unspecified whether Challenger prefers EE or DE and whether Defender prefers EE or ED. Thus we make no fixed assumption about whether either player prefers ultimately to capitulate or to fight. This preference, we hold, depends on the stakes, the anticipated costs of war, and other factors. Our model, in fact, allows for two types of players: Hard players who prefer all-out war to capitulation at the final opportunity; and Soft players with the opposite preference.

Each player in our model is presumed to know its own and the other's utilities, except that the payoffs to Challenger and Defender at outcome EE ([C.sub.EE] and [D.sub.EE]) are binary random variables--denoted by upper-case letters--with known distributions; a player knows the realized value of only its own variable. More specifically, it is common knowledge that

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This postulate affords each player probabilistic knowledge of the other's preference between capitulating and fighting at the highest level of conflict. In other words, in our model Defender {Challenger} will be seen by Challenger {Defender} to prefer EE to ED {DE} with probability 1-[p.sub.Def] {1- [p.sub.Ch]}. [p.sub.Def] {1 - [P.sub.Def]} and [p.sub.Ch] {1 - [p.sub.Ch]} are the probabilities that Defender and Challenger are perceived to be Hard {Soft}. Since these preferences determine whether the players can escalate rationally to the highest level of conflict, these probabilities can be taken to measure the credibilities of their threats to do so. The higher [p.sub.Ch] and [p.sub.Def], the more credible Challenger and Defender, respectively and conversely.(17)

II. ESCALATION AND INCOMPLETE INFORMATION

What are the effects of uncertainty on the escalation process when a defender's threat to respond in kind is inherently credible? What is the connection between the players' credibilities and the stability of the status quo when a defender adopts a flexible response deployment policy? How credible must each player's endgame threat be to deter escalation or retaliation? Under what conditions might a substrategic war be waged?

We address these questions with the Asymmetric Escalation Game (Figure 1), using backward induction to analyze Defender's choice at the last node (4). Node 4 is reached when Challenger upsets the status quo by choosing D, Defender responds in kind by also choosing D, and Challenger then escalates by choosing E. Defender's choice at Node 4 is easy to analyze, since Defender always knows its own preference between ED and EE and has no reason to conceal this preference. A Hard Defender, preferring EE to ED, always escalates, while a Soft Defender, with the opposite preference, concedes.

The same is true of Challenger's choice at the node reached (3b) after Challenger selects D and Defender escalates instead of responding in kind. If Challenger is Hard and prefers EE to DE, it will always counterescalate; if it is Soft, it will yield.

Because Challenger's and Defender's behavior at these nodes is strictly determined by their types, the only strategic decisions that require analysis are Challenger's Node 1 choice of C or D, its choice of c or E at Node 3a, and Defender's Node 2 choice of C, D, or E. Unlike the nodes already analyzed,,these decisions can depend on the decision maker's beliefs about the opponent. We denote the probabilities of these choices as follows:

[x.sub.H] = probability that a Hard Challenger initiates at Node 1

[x.sub.S] = probability that a Soft Challenger initiates at Node 1

[W.sub.H] = probability that a Hard Challenger escalates at Node 3a

[W.sub.S] = probability that a Soft Challenger escalates at Node 3a

[y.sub.H] = probability that a Hard Defender responds in kind at Node 2

[y.sub.S] = probability that a Soft Defender responds in kind at Node 2

[z.sub.H] = probability that a Hard Defender escalates at Node 2

[z.sub.S] = probability that a Soft Defender escalates at Node 2

In a game of complete information ([p.sub.Ch] and [p.sub.Def] equal to either 0 or 1), the (Nash) Equilibria of the two-stage escalation model can be described by a vector of probabilities describing action choices ([x.sub.H], [x.sub.S], [W.sub.H], [W.sub.S]; [y.sub.H], [y.sub.S], [z.sub.H], [z.sub.S]). In a game of incomplete information, the natural extension of a Nash Equilibrium is a Perfect Bayesian …