In light of the announcement that the United States will be returning to the negotiating table with Iran to discuss the latter’s nuclear program on November 29, “Game Theory” comes to mind as a mechanism by which one can make sense of the talks as well as how the talks may proceed. “Game Theory” is essentially the study of strategic decision-making and strategic interaction between two rational actors. Thus, one of the basic assumptions of “Game Theory” is that when two sides make decisions and adopt strategies regarding their interactions with another party, both sides are rational in their decision-making and in their strategic interactions.
In turn, “Game Theory” examines a set of games that have underlying strategies in the way of pursuing optimal outcomes. One of the most famous games are the “zero-sum game,” where the basic notion is that two sides pursuing resources are in a situation where the number of resources can neither decrease nor increase, thus resulting in a “zero-sum” strategic context.
Another famous game is “chicken,” whereby two sides engage in “brinksmanship” and are on a collision course despite a strategic context characterized by “Mutual Assured Destruction” (MAD). What leads to “brinksmanship” and a collision course is pride and “honor,” which prevent either side from standing down because if one were to stand down from brinksmanship, one side would look like a “chicken” and thus lose face. “Chicken” can best characterize the “Cuban Nuclear Crisis” of the early 1960’s, when President Kennedy and Premier Khrushchev of the former Soviet Union were on the brink of a nuclear war, until finally both sides decided to de-escalate the situation through backchannel diplomacy.
Then there is the “Prisoner’s Dilemma,” and this one is perhaps the most famous of the games that are covered by “Game Theory.” In the “Prisoner’s Dilemma,” two sides are separated from one another and have no communication with each other whatsoever. Thus, both sides are forced to decide whether to cooperate with one another without knowing the motives and thoughts of the other side, or to defect and abandon the other side. At the heart of “Prisoner’s Dilemma,” risk – which can be defined as the chance of an adverse outcome – is associated with both cooperation and defection. If one side chooses to cooperate but the other chooses to defect, the one who decides to cooperate will lose out, while the defector gets what it wants. If both sides decide to cooperate, risk is reduced for both sides. But if both sides defect, the risk is higher for both sides than if they both decide to cooperate. Thus, risk is minimized by cooperation, but increased by defection.
But perhaps the most interesting of all the games covered by “Game Theory” is the “Stag Hunt,” which was introduced to Western political theory by the famous French-Swiss philosopher Jean-Jacques Rousseau (who happens to be my favorite philosopher in the Western tradition). What characterizes the “Stag Hunt” is the choice between safety on one hand, and cooperation on the other hand. In a “Stag Hunt,” the reward is higher for cooperation than in safety. With safety, you would get less than what you would out of cooperation. What deters cooperation in a “Stag Hunt” is the other side’s complacency, and thus their decision to settle for something less than optimal.
What overshadows all the different games as well as the strategies which underlie the games is the “Nash Equilibrium,” which states that each side will stick to the strategy they have adopted out of a belief that the strategy which they have chosen will lead to the optimal outcome. “Nash Equilibrium” can be the result of either “cooperative” or “non-cooperative games.” In a “cooperative game,” the two sides are interacting based on a mutual understanding or a contract of sorts. But in a “non-cooperative game,” there is no such mutual understanding or contract.
Moreover, “Nash Equilibrium” suggests that there is no benefit in changing one’s course of action or strategy. Also, in “Nash Equilibrium,” one is taking into account the actions and the strategy of the other side. But one believes that despite what the other side is doing, one’s own course of action and strategy is better in achieving the optimal outcome. Ultimately, one has to choose a strategy that one believes will lead to the optimal outcome, and once chosen, the assumption and belief is that sticking to the strategy will lead to the optimal outcome. In a sense, “Nash Equilibrium” dictates that one’s decision and strategy is the “best response” to the decisions and strategies of others.
Thus, when assessing the U.S.-Iran nuclear talks which begin on November 29, one should have “Game Theory” – as well as the different games and strategies which can be at play – in the back of one’s mind.