Scottish Independence Referendum and Game Theory
Sources:
http://www.bbc.com/news/uk-
http://www.bbc.com/news/uk-
http://policyscotland.gla.ac.
On September 18, 2014, British citizens residing in Scotland voted in a referendum to determine whether or not Scotland would remain in the United Kingdom or become its own state. More specifically, the question “Should Scotland be an independent country?” could be answered with either “Yes” or “No,” with a simple majority determining the outcome of the referendum. An issue dating back centuries, the leadup to the referendum involved massive campaigns for both sides — “Yes Scotland” and “Better Together” being the major campaigns for yes and no to independence, respectively. When the 18th rolled around, voter turnout was an unusual high of 84.6% of Scottish residents. The final vote was 44.7% yes and 55.3% no, meaning that Scotland is still a formal part of the United Kingdom.
There were many economic, political and social issues implicated in the prospect of independence. As discussed in a PolicyScotland article, Scotland’s economy would encounter various economic tradeoffs, payoffs and costs upon independence, which can be analyzed using Game Theory. With an intersection of so many factors — including taxes, trade of Scotland’s natural resources, Scotland’s relationship to the European Union, and an adjusted monetary system — it is apparent that the players (or even the strategies) in this game are more than the simple “Yes” or “No” responses to the vote. Rather, all Games would occur in the scenario that Scotland gained independence, and the various Players would be other countries — after all, no country exists in a vacuum. If no nation-state traded with one another, then independence would be an entirely different affair, but in our world, it is necessary to pay attention to how the rest of the world would react to that independence. In the end, does it benefit the country’s residents, or harm them?
One example of a Game played by independent Scotland is whether or not it would continue to use the sterling monetary system, and how it would go about it. According to the PolicyScotland, Scotland could remain using the British Pound (the preference by Scottish leaders) in two ways — either through a formal agreement with the United Kingdom or an informal use of the currency. Scotland would benefit better economically through the formal agreement, as the country could cooperate with the UK regarding exchange rates and competition. However, the cost to maintaining such a union would be expensive — and so the UK’s payoff from such a strategy is very little. Without the UK’s cooperation, even an otherwise lucrative union means nothing. In this way, there was no clear solution to altering an independent Scotland’s monetary system in a way that works as well as it does now. Being only one of many economic issues with similar complexity, it is likely that even some vehement Scottish nationalists would be daunted by the many Games Scotland would have to deal with when independent.