Conflict Resolution through Game Theory
Although game theory is mostly economical strategy it has been used in many other branches too. One of them is international relations. Game theory has been used in many military conflicts since its existence. One of the most important cases was Cold War, when leaders of both Russia and America had already their thumbs on buttons to launch atomic bombs. It is known that US government used game theory to resolve the problem.
The article (http://www.economist.com/blogs/freeexchange/2014/04/war) disccuses threat of Russian invesion in Estionia and tries to find solutions through game theory. If viewed from the lense of game theory, Russia gets bigger pay of from invading Estonia than from staying out. “I think Estonia has reasons to worry.” says Michael Ben-Gad a professor at London’s City University. Although NATO states “that an attack on one is an attack on all.”. If also viewed from game theory lens NATO is not likely to behave in that way . As loss of Estonia is better payoff than war with Russia. So Russia knowing this, is more likely to invade Estonia . Also knowing the personality and past behaviour of Mr.Putin one could easily conclude that economical negative payoff from war is less important than positive payoff from extending territories for him . So if things do not change “Odds are decent that Mr Putin will start nibbling away at the Baltics after finishing with Ukraine” .
To keep Russia away from invading Estonia negative payoff should be raised so it will not be dominant strategy for Russia to attack. One solution discussed is bigger economical threat. “If America promised to counter any further aggression by locking Russia out of the global financial system (as it did to Iran) that might work, given that the policy would mean relatively minor economic costs for NATO and enormous and immediate economic pain for Russia.” Through this actions NATO might avoid the conflict by making credible deterrent. “Another option would be to put American soldiers in harm’s way, so that Russia could not invade NATO territory without directly harming American military personnel”. In this way America could make guaranty to attack Russia if it invaded Estonia as Russia could only invade Estonia by starting war with directly US, which in is not cost for Estonia.
This case seems quite like Hawk-Dove game. Where NATO has to make decision to act as hawk or dove. If Putin knows that NATO is playing dove than dominant strategy for him is to play hawk as he gets bigger payoff. However if he knows that NATO is playing hawk it is logical that he plays dove for better payoff. Above given example is one of the many ways to use game theory outside economics .