QR 38, 2/6/07 Overview of game theory I. Strategic interaction II. Game theory and international relations III. Deterrence

I. Strategic interaction What do we mean by strategic interaction? Interactive decisionmaking Actors are aware of their objectives or preferences Actors are aware of limitation on actions; constraints Actors choose their actions in a calculated manner; rationality Actors realize that they are interacting with other rational decisionmakers

Examples of strategic interaction Prisoners’ Dilemma: global warming War of attrition: Iran-Iraq War Brinksmanship: creating a risk of disaster if game continues

Principles of strategic interaction Look to the end of a game and reason backward. This is called backwards induction or rollback. Focal points: commonly expected strategy on which actors can coordinate

II. Game theory and international relations International relations is about cooperation and competition. Actors in IR have mixed motives. Example of nuclear strategy; this was the impetus for much initial development of game theory.

Assumptions In order to use game theory to study IR, we need to make some assumptions: Relations between states or leaders are driven by strategic considerations. These can be both domestic and international. Make assumptions about who the actors (units of analysis) are: leaders, states, NGOs, private market actors, domestic groups, domestic institutions, international institutions.

Categories of problems in IR We can identify 4 general categories of problems, similar to the “generic” games introduced last time: 1.Coordination (standard-setting) 2.Distribution (zero-sum) 3.Monitoring 4.Sanctioning Will look at each of these, how problems are solved, their dynamics. In analysis of actual decisions, usually need to combine these.

Advantages of formalization Make elements of the situation explicit: –Payoffs –Assumptions about risks and probabilities –Options available to players –Who the players are –What information the players have –Constraints Disaggregate the effects of different policy choices for more precise analysis

Uses of game theory Predictive Normative (prescriptive) Explanatory (why)

III. Deterrence Deterrence provides a good example of why we need a “science of international strategy.” Definition: deterrence is the use of threats to prevent a hostile act.

What makes a deterrent threat effective? Must be large enough to matter Other side must understand it Must be credible –The party making the threat must be willing to actually carry it out. This is often a problem because threats are generally costly to both sides if implemented (consider especially nuclear threats).

The strategy of conflict Thinking about the problem of deterrence emphasizes the need for study of the strategy of conflict. This means: Emphasizing calculations about how the other side will act and react (interdependent decision). One’s own actions have to be contingent on those of others. Different than coercion; not about the use of force as much as the threat of the use of force; persuasion. The most effective threats never need to be carried out.

Bargaining Most conflict situations are about bargaining: Combine elements of conflict and common interest Examples include war, strikes, trade wars About achieving your own goals, not “winning” Bargaining can be explicit or implicit

Rationality We assume that the actors in our models are rational (will define more precisely later). Why? People also driven by emotions and habits, and they have limited cognitive capabilities. The benefit of making this assumption is that it allows us to say some systematic and general things about strategy. Also allows us to be more explicit and precise about potential departures from rationality.

An interesting twist on the rationality assumption: as we will see, actors would often be better off if they weren’t rational in some sense. Consider using a nuclear deterrent. Seems to lack credibility, so might want to cultivate image of irrationality; demonstrate irrationality to other players. Could apply similar logic to being unable to receive messages.