Putin’s Push: Examining Ukraine Through Game Theory
Game Theory is an exceedingly useful way to think about the world, especially when applied to matters of international relations and diplomacy. Every action, statement, or decision made by any nation has been put under the microscope of Game Theory in an attempt to understand how other countries will react as well as whether they will take any action as a result.
An article written this year in The New York Times by Tyler Cowen (see below for link) gives a cursory examination of the recent situation in Crimea using game theory. Cowen discusses how over the last 25 years the world has been relatively peaceful, or at least more peaceful than people might have predicted given local conditions. And yet in the last few years there have been a rash of events that have escalated into problematic conflicts. This change can be explained using game theory. According to Cowen, “the more peacefully that disputes are resolved, the more that peaceful resolution is expected.” In turn, that expectation of peace promotes an increase in civility and peaceful resolution. But the logical opposite is also true: If disagreements routinely devolve into conflict, trust between nations declines and conflict becomes more likely. Looking at this, we can identify multiple equilibria (increased peace vs. increased conflict), with world events trending towards one or the other.
Looking at the situation today with Russia increasing its presence in Eastern Ukraine by backing various separatist groups, we can see how game theory plays a huge role in both Russian and American decision making. With his violation of Ukrainian sovereignty, Putin is pushing the envelope in terms of what America and the EU will accept. Russia took Crimea because it understood that America and the EU would not go to war over a relatively small land grab. But the US/EU had made declarations to protect Ukraine, and risked losing credibility if they just did nothing; hence the multiple waves of economic sanctions against Russia. But America’s reaction of levying sanctions is not just significant for this isolated event. America’s response to the situation in Ukraine sends a message to every other nation trying to predict possible American responses. Right now, America’s message seems to be that while they won’t engage directly, they will attempt to diminish the economies of countries who don’t behave. While these complex international situations could never be boiled down to simple 2×2 decision matrices, thinking about action and potential reaction on a global scale can help strengthen one’s understanding not just about what nations around the world are doing, but why they are doing it.
Link to article: http://www.nytimes.com/2014/03/16/business/crimea-through-a-game-theory-lens.html