Game theory, psychology and social sciences to understand and regain control and freedom in a complex world
How to prevent winner-takes-all democracy?
Game theory and democracy
Source: LiveMint Thu, Aug 23 2018
©2018/PROJECT SYNDICATE
Kaushik Basu is professor of economics at Cornell University and non resident senior fellow at the Brookings Institution.
In light of today’s crisis of democracy, we would do well to revisit Václav Havel’s seminal 1978 essay “The Power Of The Powerless”. First published as samizdat that was smuggled out of Czechoslovakia, the essay makes a simple but compelling argument. Dictatorships and other seemingly omnipotent forms of authoritarianism may look like large, top-down structures, but, in the final analysis, they are merely the outcome of ordinary individuals’ beliefs and choices. Havel did not have the tools of modern economic theory to demonstrate his argument formally. In my new book The Republic Of Beliefs, I show that the essence of his argument can be given formal structure using elementary game theory. This, in turn, shows that ordinary individuals have moral options that may be unavailable to the big institutional players.
The “power of the powerless” has a key role to play in saving democracy. For ordinary citizens to develop and abide by such moral codes, we need, at a minimum, better civic education, so that people understand the latent power they wield and so that users of digital platforms learn to check the sources of the news stories they encounter. […]
Unlike corporations and political parties, ordinary citizens are not locked into winner-takes-all games, because they can make small moral commitments without incurring intolerable costs.
Power in the International Trading System
Game theory, psychology and social sciences to analyse trade tensions
Dr. Evita Schmieg is an Associate in the EU/Europe Division at SWP. This paper was prepared in the context of a project on trade and development in the context of the sustainable development goals, funded by the German Federal Ministry for Economic Cooperation and Development.
“The acute question for the EU is how it should shape its trade policy. The strategy of influencing the discussion in the United States by means of cleverly targeted retaliatory tariffs on products from Republican-voting regions seems not to work in the current situation where facts have become irrelevant to political debate. Economic and legal considerations are apparently not (or no longer) sufficient for a successful trade policy. Nor can economic game theory offer much guidance, relying as it does on the assumption of rational behaviour. Instead more psychological and sociological knowledge needs to be integrated into policy development and external trade strategy. There are also new challenges for diplomacy: exerting a moderating influence on the parties to economic conflicts and developing new ideas, including the question of what world trade issues can still be addressed jointly with the United States (conflicts with China spring to mind).
G-7 summit: Trump could be using advanced game theory negotiating techniques — or he’s hopelessly adrift
Game theory and international relations
Source: The national business review, June 2018 by Charles Hankla
Charles Hankla is an Associate Professor of Political Science at Georgia State University. This article was originally published on The Conversation.
Master negotiator?
If U.S. observers accept that Trump’s shifting policy is part of a broader negotiating strategy, Americans can perhaps hope for a better outcome than what they see now.
Indeed, there is some basis in game theory for “irrational” behaviour as a negotiating technique. Nobel laureate Thomas Schelling, in his 1960 classic “The Strategy of Conflict,” pointed out that negotiators with a reputation for overreacting when their demands aren’t met can be in a stronger position to extract concessions.
If a country can convince its opponent of its willingness to follow through on threats even when they are self-destructive, the country can more effectively compel changes in behaviour. Moreover, if an opponent doubts the ability of a country’s leaders to understand or carefully consider the consequences of the opponent’s threats, the country is, ironically, in a stronger negotiating position. This “irrationality” approach was famously termed the “madman strategy” by Richard Nixon and played a role in motivating his escalation of the Vietnam War during the Paris negotiations.
Perhaps, then, Americans are witnessing the early stages of a negotiating strategy that will ultimately bear fruit.
Or malleable amateur?
Even in this optimistic scenario, however, the president’s approach seems too myopic.
After all, international trade negotiations do not play by the same rules as military diplomacy, where much of this theory was developed. Such techniques might have a greater change of working with Iran and North Korea, but of course the risks of escalation here are even more severe.
Trade is different because it is mutually beneficial and also because it requires cooperation that is sustained over time. A country’s reputation for stable compliance with its agreements is thus put at a premium; otherwise the country risks being shunned by potential partners. To wrest trade concessions from America’s partners may be satisfying, but if it is accomplished at the cost of weakening the world trading system, it is hardly worth the price.
The costs of instability
If, on the other hand, Trump’s unstable policy is a symptom of indecision in the face of the competing agendas of his aides, the world economy may be in for a bumpy ride. Irrational behavior can be used selectively as a negotiating technique but has a high cost if not applied carefully and strategically. If a country’s negotiating partners doubt its willingness or ability to follow through on its promises, cooperation becomes impossible.
In the final analysis, a stable and rule-based trading system is in the United States’ long-term interest. Inconsistent and aggressive trade policies, whether produced by a master negotiator or a malleable amateur, risk poisoning the mutual trust necessary to make such a system function.
Some are now saying that President Trump is in the early stages of reconsidering America’s membership in the WTO. Hopefully the president will come to understand what is at stake soon, before it is too late.”
