The Samir Kuntar Prisoner Exchange and the Law of Moral Hazard

by Kenneth Anderson

There is one book that I have my classes in international business as well as public international law both read (actually, I read it aloud to them and later give them a pop quiz), If You Give a Mouse a Cookie.  It is the single finest book on incentives and moral hazard available, I believe:

If you give a mouse a cookie, he’s going to ask for a glass of milk.

And it doesn’t stop there, of course. Reward behavior and you’ll get more of it.

Update:  Ben Davis comments:

Folks, if we get into comparative awfulness or comparative virtue about Israel and the Palestinians, this will never end. There are people on each side who think they are the angels and the others are the devils. And are absolutely certain about their view. So rather than rehash this path again and the debates about the breaches of the instruments that demonstrate under sets of views illegal actions by this side or that side, is there a possibility of going to some kind of third space on this that moves the ball farther up the field towards some assistance with building a long-term peace that is meaningful for all the parties?

Point taken.  But in broadening this out, let me ask if anyone would like to respond to the more general observation, which is about the decision between immediate actions and the incentives or disincentives created by those immediate actions.  It is a fundamental question for many of the debates in international affairs, and international law, since that law seeks (whether wittingly or not) to structure incentives.

http://opiniojuris.org/2008/07/17/the-samir-kuntar-prisoner-exchange-and-the-law-of-moral-hazard/

2 Responses

  1. Folks, if we get into comparative awfulness or comparative virtue about Israel and the Palestinians, this will never end. There are people on each side who think they are the angels and the others are the devils. And are absolutely certain about their view. So rather than rehash this path again and the debates about the breaches of the instruments that demonstrate under sets of views illegal actions by this side or that side, is there a possibility of going to some kind of third space on this that moves the ball farther up the field towards some assistance with building a long-term peace that is meaningful for all the parties?
    Best,
    Ben

  2. Thank you for referring to it as a ‘Law’. The consequences of rewarding bad behavior have been demonstrated time and again, the question being how long it takes for the result to become visible. Whether it is unequal prisoner exchanges, Iran-Contra, or fostering and bailing out foolish lenders, one who rewards undesirable behavior ‘just this once’ cannot avoid establishing precedent which will likely be more painful to reverse in the future.

    I acknowledge there can be tremendous pressure to cave in ‘just this once.’ And resisting the pressure requires a lot of backbone and substantial political support, especially in a representative government. In the particular case it often seems worthwhile at the moment, but five years later is terribly regretted.

    And, this is not to say that the results of an anti-moral hazard policy (ie., not negotiating with terrorists, not bailing out mammoth foolish lenders) are palatable. No, those results can be dreadful also. But the long term result is better.

    The best form of compromise where possible (and it is usually not possible), may be to have the bad actor transformed into a good actor, so that one is viewed as rewarding the transformation itself and not the bad behavior. But this is seldom available because it requires either (1) the utter defeat and successful transformation of the bad actor (post-war Germany and Japan) or (2) its highly-unlikely and questionably-credible voluntary transformation (Libya?). The bad examples outnumber the good to middling combined. The past fifteen years of nonproliferation efforts have largely been a moral hazard nightmare: North Korea, India/Pakistan, Iran. And among other things, Iraq proved that defeat does not always result in the transformation desired.

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