Psychology and Game Theory: Deceiving the Wise Guy
Make them an offer they can’t refuse.
In the capriciously violent world of the Mafiosi, application of the Game Theory oftentimes becomes a matter of life and death. An underlying assumption we tend to make when applying the rule of game theory is that people are rational.
But rational does not necessarily mean optimal. The terms should not be synonymous, as there have been occasions where making the most rational decision actually led the subject to being worse off. In this blog, I shall explore this notion a little further by analyzing an iconic scene from one of America’s favorite movies.
In the 1972 film, the Godfather (shame on you if you haven’t seen it), Don Vito Corleone, head of the Corleone crime family, organizes a meeting with the heads of the five families of New York with the interest of coming to a ‘peaceful’ resolution to their conflicts, shortly upon recovering from an attempt on his life and learning that Sonny, his eldest son, has been brutally murdered on behalf of one of the families. Over the course of the meeting, he persuades his adversaries that it is in their best, selfish desire to select the most rational choice of peace (given the information they have) that is in reality, the least optimal strategy that would ultimately ensure the Corleone’s dominance and secure their downfall.
Given the alternative choice of war, it is understandable for Vito to choose the latter and extract unrelenting retribution on his adversaries. Sure, it might grant him emotional satisfaction in the short run, it is not most optimal decision for the optimal Vito to make in the long run. In selecting the least optimal choice, he would ensure the destruction of the Corleone’s. At its crippled, pathetic state, the organization would crumble to the collective fist of its adversaries. Here the Don, being severely handicapped, must nonetheless convince the other dons that it is in his and their own self-interest to avoid a war by first guaranteeing his youngest son, Michael’s safe return from Italy.
So what made Vito, the lone swordsman in a room of heavily-equipped artillerymen, successful in persuading his foes to lay down their weapons and inadvertently acquiesce to his demands?
Ethics, honor, and tradition aside, he assumed that each one of them was selfish; that each don’s would make his decision of war or peace by acting exclusively on his organization’s best interest. Using this assumption, he convinced them that he was the same; that ensuring peace between the families was in his own selfish interest as well.
Furthermore, Vito made the opposition believe that in addition to caring only for himself, that he was also irrational. This is demonstrated by his raised tone and occasional outbursts.
“I’m a superstitious man, and if some unlucky accident should befall him… if he should be shot in the head by a police officer, or if he should hang himself in his jail cell, or if he’s struck by a bolt of lightning, then I’m going to blame some of the people in this room, and that I do not forgive.”
As we know from our own experience and intuition, irrational people are unpredictable in that they do not necessarily conform to most decision making models; that they do not consistently make the best choices, and thus, are difficult to analyze and predict.
Thus, being cautious would be the most rational response from the other dons. They still do not know the true state of the Corleone family at this point. Vito is projecting upon them an illusion of his power (which is little to nonexistent as we know); that in addition to being feared, he is also highly irrational and will make costly decisions based on his emotions. He is bluffing them at the poker table and they are folding their hands when in reality they have stronger cards.
What is perceived by the other dons to be the equilibrium matrix (the bluff):
Vito/dons
| Peace/PeaceBoth sides gain from the peace that is established. | Peace/WarBoth sides suffer. Corleone family suffers more significantly due to a lack of preparation. |
| War/PeaceBoth sides suffer. The other families suffer more significantly due to a lack of preparation. | War/WarBoth sides suffer significantly.
|
In reality, declaring war on the Corleone’s would be the most optimal choice for the other families, as the organization’s leadership and infrastructure have been severely compromised at this point. Sonny is dead, Vito is still recovering from his injuries, Fredo is too naïve and too stupid to be the new don, and Michael is in Italy, hiding. Moreover, two of their high ranking caporegimes, Tessio and Clemenza, have decided to switch their allegiances, along with the numerous corrupt politicians in Congress whose loyalties once belonged to Vito.
The real matrix:
Vito/dons
| Peace/PeaceThe Corleone family gains significantly due to Michael’s return as well as additional time to recover and plan for the future. | Peace/WarThe Corleone family is wiped out due to lack of strength and preparation. The other families gain significantly by eliminating their rival. |
| War/PeaceThe Corleone family suffers. The other families gain. | War/WarThe Corleone family suffers significantly. The other families gain. |
In the first scenario, it is there is a Nash Equilibrium that is a clear dominant strategy, and that is peace from both sides. However, in the second scenario, Vito’s choice, albeit inevitable loss, will be a best response to the decision made by the other families.
In reality, it is in the best interests of the other dons to declare war on the Corleone family and ensure its destruction. While casualties and losses are inevitable in the short run, the families have much larger long term gains in eliminating a major rival. A plethora of businesses and territories will be under their control in addition to the numerous politicians who make laws for the right price. But given the surreptitiousness of the Corleone family combined with Vito’s oratory skills, they have been deceived to choosing the less optimal strategy. Nonetheless, that strategy is still a rational decision given the information (or lack of) they possess.
Deceiving the brains of New York’s most powerful criminals (whom make their living by deceiving others) requires a profound understanding and application of the Game Theory along with other factors. Vito is able to exploit it so well that in addition to making the Corleone’s better off, he is able to put the other families at a disadvantage in the long run. The strategy is brilliantly crafted and so well executed that it ultimately leads his adversaries to their demise (sorry for spoilers if you haven’t seen the film, but you should have seen it already). This scene is brilliantly highlights the application of the game theory in its finest sense; that rational decisions are not necessarily optimal decisions. In successfully decrypting the psychology of his enemies and leading them to make assess their decision from a false matrix, Vito is able to ensure the survival of his organization and secure the downfall of his adversaries.
References and citations:
Link to the text (p. 240-248)