Why do wars, which are costly for both sides, continue to occur? In looking for a rationalist explanation, James Fearon concluded that rational, cost-benefit analysis can break down because one side has information the other side does not and that there are incentives to misrepresent your capabilites and/or willingness to fight.
Why did the U.S invade Iraq when there existed a wide range of less costly compromises that were acceptable to both sides? It is obvious that Sadam adopted a risky strategy. He decided to misrepresent Iraq's capabilites vis-a-vis their nuclear weapons program. However, even if he had not done so, there are a variety of other reasons that the cost-benefit analysis on the U.S. side would have failed.
It is almost fair to say Benefit was seen as great (Cheney's comments of the amount of oil that would enter the world market soon after toppling the Iraqi regime) and Cost was seen as next to zero. The analysis failed - the costs were not accurately assessed. The number of troops it would take, the time commitment, the complicated Iraqi political environment, and the domestic political costs. Would conciliatory measures on Sadam's part deterred a U.S. invasion? Nothing short of going into exile would have shifted the distorted cost-benefit picture of the U.S. administration to an alternative other than war.
Is Iran willing to misrepresent its capabilities and suffer a similar fate as Iraq? When U.S. rhetoric has pushed for regime change at the same time for an end to a nuclear program - we are in effect saying " Please get rid of the only thing that makes us worry about you so that we can then get rid of you."
In studying when deterrents actually work, Russet and Huth made two conclusions (among others):
- Excessively conciliatory bargaining behavior undermines credibility and therefore, deterrence.
- Excessively hostile threats provoke hostile responses and trigger an upward spiral of escalation
Regarding the second conclusion, we must take into account the domestic political atmosphere in which Ahmadinejad operates. Plenty of studies say the Iranian population is West-ward looking and don't want confrontation. However, excessively hostile rhetoric could lead them to feel isolated and threatened - therefore sending their support behind a leader who will protect them.
Regarding the first - at the end of the day there are may nations who do not want to see a nuclear Iran and there are many avenues of pressure to pursue given enough political capital in Washington. There is no international capital there to spend now. A new administration would have some and bargaining, in this situation, does not hold the risk of undermining credibility. We stand to lose nothing through a dialogue. If it doesn't work, there are always the bombs.