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I want to discuss in more detail about some of the wonderful ways the subject of Game Theory is used today. Specifically, I want to talk about William Spaniel and his awesome blog Game Theory 101. Spaniel’s alma mater consists of a BA in International Relations with high honors from the University of California, San Diego; and an MA and PhD in Political Science from the University of Rochester. He’s now a Stanton Nuclear Security Postdoctoral Fellow at Stanford University’s Center for International Security and Cooperation basically trying to prevent the world from reaching nuclear winter or meeting some other kind of international doom. Game theory is explicitly what he studies and applies to the realm of international peace and conflict for a living, so the guy’s a freaking genius. Anyway, I admire Spaniel due to his uncanny ability to tie this conceptual-ass theory to real life and the world around him. This even includes Star Wars Episode V — The Empire Strikes Back, which he discusses in one of his blog posts. Now, I should provide a disclaimer: I’ve never been a huge Star Wards fan, and haven’t seen like half of the movies. But as I mentioned earlier, I respect the guys fierce understanding of the subject, so I sucked it up and listened to what he had to say about how game theory was applied in the film.

So, remember the scene when the Millennium Falcon’s hyperdrive failed upon leaving the asteroid belt and Solo somehow manages to attach the spaceship to a Star Destroyer that was about to blow it up? I don’t, but apparently, the Falcon managed to stay hidden long enough to make the Destroyer think it had warped out of there. Vader wouldn’t accept the disappearance and commissioned space bounty-hunter Boba Fett to track down the Falcon. This is where game theory comes in, according the Spaniel. He argues that a rational Vader would need to offer Boba Fett a substantially large reward — one that goes beyond basic costs. Otherwise, Boba Fett would have little incentive to put in considerable effort, and that’s’ if he even accepts the bounty. Since Vader is unaware of how much risk and effort would need to be undergone by Boba Fett, and given that he wouldn’t be supervising Fett, the claim that Vader would need to preemptively offer a high reward is solidified regardless of how much effort Boba Fett actually ends up putting in. However, let’s look at Fett’s side of the contract. Assuming he would be unsupervised, there would be a huge incentive for Fett to keep it a secret that he knows exactly where the Falcon was and what it was doing such that he could claim a high reward designed for a high-effort job despite putting in relatively low effort. And that’s exactly what happened. Boba found the Falcon with relative ease, followed it to Cloud City to make it look like he had put in some considerable work, and contacted the Empire upon arrival. Had Vader offered a high reward for the job initially, he would have been able to avoid the hassle and would have been handed the Falcon’s location earlier, with less trouble. Had Vader understood game theory (and more specifically, contract theory) in this context of bargaining to a better extent, he would have gotten things his way and Fett would have also been satisfied.

In any case, as interesting (?) as the theory of games might be in the world of fiction, it’s always nice to see it happen before our eyes in the real world, where its impact is much more pronounced and significant. Let’s return to the topic of bargaining. In another blog post, Spaniel discusses President Donald Trump and how he has applied game theory to his legislation process in the past few months. First, though, I need to introduce you to the idea of Proposal Power. According to Spaniel, “Proposal Power is the ability to structure the terms of a possible settlement. It is distinct from receivership, which is the ability to say yes or no to any particular offer.” Simply put, the point is that the player who introduces the deal is at an advantage over the person who can either accept or reject the deal. This is an important concept when talking about Trump and his addiction to Executive Orders. See, when Congress drafts and introduces a bill to Trump, it’s usually bound to me more inline with their own agenda and interests. Trump, as the receiver, has the option to either approve or veto (accept or reject) the bill. However, the tables are turned when Trump implements an Executive Order. When he does so, the bill is likely to be more attuned to his own interests and agenda, with Congress holding the role of receivership and having the choice to accept or reject the bill. Here’s the thing, though. The player introducing the deal also has the ability to predict how willing the receiver is to accept the deal. Thus, the proposer can construct the deal in such a way that the receiver will just barely accept the deal, while benefiting from the deal as much as the receiver will allow. Here lies the true strength of proposal power. The proposer has the opportunity to benefit the most, proving that he knows the art of the deal all too well. Still wish he wasn’t president though.