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Game Theory in Ukraine

This article from the Economist discusses the recent conflict in Ukraine. More specifically, it delves deeper into how this situation has brought the United States and Russia back into a similar situation as to that of the Cold War in the late 20th century. The author argues that Ukraine has become the focus of a new game, in terms of game theory, between the United States and Russia. The big focus of this article though is not on the game itself, but how two different games are actually being played. The author argues that while Russia is actually playing chess, a two-person game, the United States is actually playing monopoly, a game in which many different players are taken into account before each player makes a move. Due to this dichotomy, the author argues that at some point, the United States must start playing this chess game in order to avoid losing to a Russian nation that does not play by the same rules.

Looking further into this chess game, there are four options:

Peace/Compromise

 

Both nations compromise with no loss of life and mutual benefits and concessions.

War/Peace

 

One nation stands by as the other nation takes what they want regardless of the effects on other nations.

Peace/War

 

One nation stands by as the other nation takes what they want regardless of the effects on other nations.

War/War

 

Mutually Assured Destruction (MAD)

 

 

            As can be seen above, there are four main options. Note, the actual game is much more complicated than this as there are other nations involved and various economic and social factors as well, but this is a simplified summary for our purposes. Going back to what we learned in class, there are only two real possible outcomes/Nash Equilibria: Peace/Compromise or War. Obviously, as in the Prisoner’s Dilemma, the best option is for both nations to compromise and concede certain objectives to their opponent. The real question going forward is whether or not the political, social, and economic climate will allow for these two stubborn nations to compromise and be reasonable in their demands of one another, or will the outcome be what everyone feared during the Cold War: Mutually Assured Destruction via the use of Nuclear Warfare.

Link:

http://www.economist.com/blogs/democracyinamerica/2014/03/game-theory-ukraine

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