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Game Theory and Washington’s Gridlock

The article discusses the intuitive application of game theory to the decision making strategies of our Congress, and provides insight into the difficulty of bipartisan relationships, strategies and coherent approaches. The author claims that good cooperative outcomes are merely impossible when incentives are misaligned and delivery of information is uneven. The specific example examined is the fiscal cliff at the end of 2012. After the deal was made at the 11th hour on the fiscal cliff – economist and game theorists looked at the momentum and continuation that would drive the decisions of both parties in the next few weeks and came to a few conclusions which could easily be translated to the strategies of both parties in a simple game theory. In this situation is was known that the parties would not cooperate, the democrats had less bargaining power after the fiscal cliff and that no outside enforcement would have an effect on the decisions made.

 

Although game theory is typically thought in terms of more traditional economic strategies, this article sheds light onto the broader applications of game theory in the world around us. The implications of group think and personal bargaining that can influence the decision of any congress member can be contextualized into a simple game theory grid and our nation’s political parties can be seen as the players on this congressional game. The games we looked at in lecture and in homeworks are simple versions of this broader theory that can be used to attempt to explain the decisions of larger bodies of people.

Source: http://www.theatlantic.com/politics/archive/2013/01/how-game-theory-explains-washingtons-horrible-gridlock/267142/

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