Two approaches explain how international institutions work, and they are the rationalistic and reflective approaches. When it comes to the rationalistic approach, the focus is on specific organizations where the emphasis is on international regimes. The theory begins with the premise that in world politics, if there are no substantial gains from agreements, then specific international organizations need not exist (Fioretos, 2017). However, there are mutual benefits from such agreements. For instance, assuming there would be no costs in international agreements, where the mutual gain would come easily, there would be no need for the institutions as they facilitate cooperation. The potential value of agreements, coupled with the hardships of making them, makes international regimes significant. Therefore, the rationalistic theory views international organizations as cost affecting patterns. Although such institutions significantly reduce certain levels of risks and uncertainty, there is a price to pay hence increased costs. With or without hierarchical authority, international organizations, through monitoring, stabilize expectations through research and provision of information (Keohane, 1988). The rationalistic approach can also be used in the development of compliance and noncompliance with commitment theories. The sovereignty of institutions preludes hierarchical enforcement, which is not always the case for international organizations. For them to be successful, the institutions' injunctions have to be respected and obeyed. Although not proven effective, there is a game-theoretic argument which suggests that one of the strong incentives for compliance is reputation (Fioretos, 2017). However, the reputational basis of enforcing agreements has not been proved effective, at least not in the political world. One of the reasons for this is opportunism; a theory vastly applied in politics. Nevertheless, among contractual partners, reputations can often be differentiated, and violations of such agreements concealed. Historically, there is no concrete evidence of governments that have been punished for violating agreements with other countries (Fioretos, 2017). Similarly, in the case of debt, governments that have defaulted have not been punished by higher interest rates even in their subsequent loans.
The rationalistic theory can also assist in getting a thorough scope of the changes and forms of the political world. For example, one of the key sponsors of extant international regimes is the diffusion of power from hegemonic states (Keohane, 1988). In as much as hegemony is a crucial aspect for maintaining international relations, such a move could weaken the regimes' rules by creating unnecessary pressures. The only way that the rationalistic approach can be used to detect and anticipate change is by defining the characteristics of the particular institutional situation. In other words, the theory is useful in insight generation regarding the unintended consequences of social institutions' interactions. The theory, even in its terms, has some limitations. One of the areas is the Folk Theorem of game that states that for repeated Prisoner's dilemma where 2*2 is included in the class of games, the feasible equilibria above maximum points for both players are many (Keohane, 1988). However, without prior knowledge about the situation's structure, it is difficult to predict the one to emerge. What this means is that assumptions of investigations of formal models of cooperation determine the conclusions of such models. The bureaucratic and agency theory further complicates the limitations. The theory suggests that if people in an organization have different interests, the organizational actor will not act per its interests (Keohane, 1988). Therefore, the issues of what organizations to develop, their effectiveness, and whom they will benefit are left in the open by the rationalistic theory. Even in formal confines, the rationalistic approach is not enough as it neither yields answers nor gives explanations to puzzles (Keohane, 1988). The theory is only good at posing queries and offering suggestions on the lines of inquiry but does not provide the answers to such questions.
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References
Fioretos, O. (2017). Institutions and Time in International Relations. International Politics and Institutions in Time , 3-36.
Keohane, R. O. (1988). International Institutions: Two Approaches. International Studies Quarterly , 32 (4), 379-396.
