Did Greece score an own-goal with game theory?
The article speaks about the negotiations going on between the Greek government and the creditors they are looking to make a deal with. The finance minister of Greece, Yanis Varoufakis, recently resigned but the Greek negotiating team seems to have been using game theory in their decision-making. For example, a referendum was called and the support of the Greek people for their position can now be leveraged against the creditors so that they feel as though they are forced to reach a deal with the government. Varoufakis’s resignation was another strong move on his part in order to get creditors to see the severity of the issue and their willingness to help.
This article relates to on of the overarching themes that we have talked about in class extensively, game theory. The two moves made by the Greek government’s side (the referendum & Varoufakis’s resignation) have been executed very well and the creditors have yet to make their move. In game theory, we see the interactions between two parties when it comes to decision-making and according to Eyal Winter, the European creditors could have easily put out a statement saying they cannot accept these demands. Winter believes that this statement would have given them an advantage because they have less to lose. However, this move was not taken and perhaps it is part of their strategic decision-making. Like in most game theory scenarios, one party’s moves may not be the most beneficial and in this case for the Greeks, it seems as though it may affect them severely in the long-term. Though they may be okay in the short-run, it will be much tougher to reach a deal in the future and therefore not the best move in this “game” for them.
Source: http://utahpolicy.com/index.php/features/today-at-utah-policy/7006-game-theory-and-politics-what-mario-kart-can-teach-us-about-2016