GOOD TIMES, BAD TIMES, AND THE DIVERSIONARY USE OF FORCE - A TALE OF SOME NOT-SO-FREE AGENTS

It is commonly asserted that state leaders, when faced with poor domestic political conditions, have an incentive to engage in diversionary foreign policy behavior. The standard view is that an aggressive foreign policy benefits the executive by leading the public to ignore domestic problems and to ''rally around the flag'' to meet the foreign threat. In this article, the authors formalize the diversionary argument as a principal-agent problem in which the state executive is an agent under contract to a public whose choice to retain or dismiss the executive is based on whether the agent is judged to be competent. The authors assume that the competence of the executive is private information and that the public makes Bayesian updates of the probability of executive competence based on domestic and foreign policy outcomes. Several implications are derived from the model. First, the competence of executives and their attitudes toward risk are central in the decision to engage in diversionary foreign policy. Second, an executive often can improve her or his chances of being retained only by altering the public's perception of the difficulty of the foreign operation. Third, the model points to the need to distinguish between short-term rally-around-the-flag effects of diversion and the public's long-term assessment of executive competence.