Game Theory and NATO
On April 15th, 2014 an article from The Economist suggests that the NATO treaty is not as strong of a war deterrent as many would like to think. The article, titled “War: This is not a game theory” uses game theory to analyze the costs and benefits of potential outcomes of Russia “acquiring” territory from NATO members in their vicinity. If you proceed in chronological order, Russia has a very large negative payoff from starting a war, as the NATO treaty “essentially says that an attack on one is an attack on all” and the negative payoff Russia would be inflicted with far outweighs any positive gain from gathering small amounts of territory according to the aforementioned Economist article. However, if one uses “reverse induction,” as the writer calls it, all of NATO’s payoff from essentially starting World War III for the sake of defending some territory in the Baltics and risking nuclear war is much greater than turning a blind eye, and one would assume that Putin knows this and thus proceeds to do as he likes, unchallenged.
This relates to what we have done in class in many ways, but I am going to analyze the most straightforward connection. This connection obviously, is that it uses game theory and payoff matrices to analyze the choices of both NATO and Russia. Imagine a two-by-two matrix where the two players, NATO and Russia, have two options, war and peace. If they both choose peace, they both have a payoff of zero, as nothing happens. If both of them chose war, they would both have a hugely negative payoff, let’s say -∞. However, if Russia chooses war and NATO chooses peace, Russia may have a payoff of +10 from acquiring some territory, and NATO would still have a negative payoff, but it would only be about -5 as opposed to -∞ if there was all out war between the two parties. Therefore, it is the dominant strategy of NATO to always remain peaceful and as Russia knows this, they are free to do as they please.
Source: http://www.economist.com/blogs/freeexchange/2014/04/war