Game Theory and the Ukraine Crisis
Article: http://www.bloombergview.com/articles/2015-05-12/gaming-the-ukraine-crisis
Game Theory and the Ukraine Crisis
What can game theory tell us about the crisis between Russia and the Ukraine? Professors of Economics Richard Ericson and Lester Zeagler have published a scholarly article attempting to use game theory modeling to predict the possible outcomes of the situation in the Ukraine. Giving each side (Russia and ‘The West’) three possible policies (moves) in their matrices, Ericson and Zeagler found that the equilibrium scenarios were either Sanctions by the West and further Destabilization by Russia (the most likely outcome), or Business As Usual by the West (no change in policy towards Russia) and Destabilization by Russia.
The game presented in the study ends after two consecutive terms of inaction by either player, and the Economists found that the game always ended rather quickly. This definitely correlates with the real-world outcome of the crisis, as neither side was willing to escalate the crisis to all-out military conflict. Vladimir Putin, the Russian Prime Minister, was most likely using the crisis as a show of personal power and a rallying point for nationalistic sentiment.
The small, highly publicized confrontation did wonders for his popularity amongst the Russian public, and a war with the Ukraine would have been unnecessary to achieve his goals. Furthermore, it makes additional sense that the game ended so quickly when one considers the financial strain the crisis was exerting on Russia. In class, we learned that game theory must take place between two rational players. Though Putin may seem irrational at first, the quick end to the game asserts his rationality. Putin was playing the game as a way to take the Russian public’s eye off of the failing domestic economy, but the crisis also increased international sanctions on Russia. These sanctions further handicapped an already failing economy. To play the game for too long would have been economic suicide for Russia, and perhaps the downfall of Putin’s regime.
In addition, we learned about stable and unstable social balances. This case represents a stable dyadic balance, as the West is one large component consisting of multiple nations with positive relationships, all with mutual dislike of Russia. The relative stability of this network is one of the reasons why the game ended so quickly, as no player in the West ever wavered in their support of its side. In hindsight, the model produced by Ericson and Zeagler was extremely accurate, as the game did in fact end quickly without any major escalation of conflict.