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The Debt Ceiling Deal: The Case for Caving (Part 3) - 0 views

  • The Tea Party, in this sense, has succeeded by adopting a rational frustration strategy.
  • You can find fault with the Tea Party’s prescription for balancing the budget—most economists do—but if they hadn’t come to Washington last year, Congress would have waited for a real bond crisis, five or 10 years from now, to create its super committee.
  • We will know, at the close of the next round of negotiations, which game the Tea Party has been playing: Balance the Budget or Kill the King.
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  • I appreciate pquincy’s thoughtful comments. With regard to the reference to divorce, it’s also worth noting that – regardless of whether or not there are children involved – almost all divorce cases (along with almost all other civil cases) are resolved through a bargained solution (i.e., a settlement) rather than a trial. But in the vast majority of cases the bargained solution is not achieved until the parties arrive at a critical deadline such as the eve of trial. This is because, prior to the deadline and as suggested by Brams, “each player has an incentive to dissemble” in pursuit of a better outcome for itself. Since each player intuitively understands this, neither views the other player’s assertions about their “bottom line” to be credible, and neither can convince the other of the genuineness of its own position prior to the deadline.
  • Pquincy ‘s suggestion that this problem should eventually become less acute in a repeated game appears to be correct. But in the game of politics, it seems that (as in litigation), a player can be expected to pretend – in the pursuit of self-interest and for as long as it can – that it is less interested in arriving at a bargained solution than it is in pursuing some sort of abstract principle (such as what it would characterize as “justice” or “the public good”).
  • In contrast to some of the other people that have posted comments in response to this article, I don’t think the outcome that was ultimately arrived at in the debt ceiling negotiations can be fairly attributed to Obama’s having played the game poorly. Rather, I think the outcome was attributable to the fact that it was obvious from the outset that Obama’s objective (regardless of whether one wishes to characterize that objective as “preserving the health and safety of our most vulnerable citizens" or “holding on for a few more years to the remnants of a bloated welfare state”) would unquestionably be placed further out of reach if he were to walk away from whatever deal the other side was ultimately willing to grant as of the deadline. He could not credibly pretend otherwise.
  • Although this article muddles a few basic concepts, it serves to illustrate that game theory offers a relatively straightforward explanation for much of the conflict that exists in the world, certainly a much better explanation than is routinely put forth by partisans and commentators. Brams is spot-on. And it's a cop-out to claim that game theory assumes that people are hyper-rational, or that it does not apply when someone is seeking an unreasonable goal. Even if your adversary's goal is, at least in your view, unreasonable or irrational, game theory allows you to understand how you and your adversary can be expected to behave in the pursuit of your respective objectives.
    Part 3 of the piece.

The Debt Ceiling Deal: The Case for Caving (Part 2) - 0 views

  • Game theorists distinguish between “cooperative” and “noncooperative” games.
  • A cooperative game looks to divide a pie in a way that leaves both sides with trust in the process.
  • The object of the game, as each leader described it, was about how best to divide the pain of closing the deficit, in the same way a family sits down to a pile of bills on the kitchen table.
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  • The two parties in Washington pretended to be playing a cooperative game this summer.
  • The President’s bipartisan commission on deficit reduction, set up late last year and chaired by Democrat Erskine Bowles and Republican Alan Simpson, also played a cooperative game.
  • A noncooperative game lacks a higher authority to impose agreements on both sides.
  • In Washington, no politician is bound to reach a compromise to solve any long-term problem. Everyone, however, is playing a game called “election,” and the only possible goal in that game is to win the next one.
  • If you hear someone in Congress say, “Senator X is just playing politics,” a perfectly legitimate response is, “She has to. Those are the rules of the Constitution.”
  • Anyone who promises to fix or change Washington is merely attempting to impose a cooperative game on a town that, by design, can’t play one.
  • A game theorist would say that the President is trying to play a cooperative game in a town that can’t play along with him. The trouble for the White House is that the Republicans aren’t playing a game called “fix the budget deficit.” They’re necessarily playing one called “defeat Barack Obama.” A reasonable offer seldom works in a divorce; there’s no reason to expect it would in Congress.
  • Obama and the House Republicans, says Steven Brams, were playing chicken this summer, a noncooperative, non-zero-sum game in which both players can lose.
  • Brams argues that there’s no value in trying to determine whether anger is real or feigned; it has the same effect either way.
  • frustration can actually turn a noncooperative game cooperative
    Part two of the article, because there isn't a 'single page' option. Booo.

The Debt Ceiling Deal: The Case for Caving - 0 views

  • Failure to reach a deal threatened to bring on the economic equivalent of a nuclear winter. The leaders of the two parties, Barack Obama and Speaker of the House John Boehner (R-Ohio), appeared to grasp this, but a vocal band of “Tea Party hobbits,” as their fellow Republican, John McCain of Arizona, dubbed them, refused to go along.
  • Trapped in a classic game of “chicken”—a term game theorists use, too—in which both players entertain the option of killing everyone, the President did what game theory suggests a rational actor would do. He recognized his potential maximum losses were greater than his opponent’s. He caved.
  • for all the collective self-loathing that attended the debt ceiling talks, it’s important to remember that, like just about everything in human behavior, it was still reducible to a game. Looked at through the prism of game theory, it’s hard to see how the outcome could have turned out any other way.
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  • Crucially, game theory assumes that no one is crazy, and it’s true in life that almost no one ever is. There’s also a pragmatic reason to treat your opponents as sane: You can’t make predictions about their behavior unless you do.
  • People act crazy, but they’re at their craziest when they want something. All you can do in response is to make your most honest estimate of what the crazies actually want, and respond as if they are methodically pursuing it.
  • There is no advantage to be gained, for example, in pointing out that Kim Jong Il is a potbellied nut job in a bad suit. Everything he’s done during his reign as North Korea’s leader suggests he’s an amoral, but sophisticated, negotiator. Unpredictability, says Brams, can be a smart strategy.
    • anonymous
      When I was a kid, I remember hearing that Saddam Hussein was 'crazy'. I suspect that it's the only conclusion if you can't see connections.
    "Game theory does not concern itself with good and evil. It seeks to predict not which strategies are just, but which are most effective. John von Neumann, a Hungarian-born polymath with a sideline in predicting the blast radius of an atomic bomb, co-authored the discipline's seminal work, Theory of Games and Economic Behavior, in 1944."
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