Donald Trump’s Primary Strategies Through the Game Theory Lens
Presh Talwalker started MindYourDecisions.com in 2007. The site discusses math and game theory. The founder studied economics and mathematics at Stanford. Recently, he has been making math videos on youtube. In his blog article entitled “Strategic Moves in Donald Trump’s Presidential Campaign – Game Theory Tuesdays,” Talwalker discusses several strategies that Donald Trump has used so far in the Republican Presidential primaries to maintain his lead over his competitors.
First, Trump retaliates against any other candidate who criticizes him. The article posits that the “Chain Store Paradox” is a game theory model that might shed light on his motivation. When the owner of a chain of stores with a monopoly in twenty cities is faced with competition in one city, the owner can either (a) engage in a price war to make it too economically painful for the new competitor to survive or (b) keep his/her prices the same, and give up market share by sharing sales and profits with the new competitor. Engaging in a price war may cause the store to lose money in the short term, but it sends a serious message to potential competition in other cities. The store will do anything necessary to defend its monopoly position. This aggressive strategy is more likely to keep competition out of its markets. One price war may be worth more than sharing profits in twenty cities. Trump employs the more aggressive tactic in the “Chain Store Paradox” by attacking candidates. He believes he will preclude other challengers from attacking him. While this strategy has seemingly worked so far (Trump is ahead in the latest polls by about 10%), candidates realize that if they all attack Trump and work together, this strategy ultimately will break down. In the “Chain Store Paradox,” if some other company opens up twenty stores to compete with the original stores, a price war is not an effective strategy, as this will cut profits for both companies.
Second, Trump rails against political correctness. In the first Republican primary debate, Megyn Kelly of Fox News asked Trump about a series of his misogynist quotes. He did not take the question seriously, going as far as insulting Rosie O’Donnell during the debate. Mr. Trump is betting that voters prefer a candidate who is honest versus politically correct, even if he comes off as offensive. The article cites a game theory paper, by Stephen Morris. In that paper, Morris explains the problem of suppressing truth or well-meaning questions that might not fit society’s accepted norms. Stephen Morris shows how people might even have an incentive to lie because of political correctness. Trump is betting that people understand the limitations of political correctness and value the truth.
Sources:
http://www.econ.brown.edu/fac/Glenn_Loury/louryhomepage/teaching/Ec%20237/Morris%20(JPE)%202001.pdf