Real-world game theory
This article details how game theory can be directly applied to real-world and, in this case, political situations. The article describes how the United Nations is working to combat climate change and create effective policies as the Paris negotiations approach. Over fifty countries submitted pledges to the United Nations detailing their plans of action regarding climate change, and a group of economists from Norway, the Netherlands, Germany, and Scotland have come forward with a method to predict the outcome of these talks using the fundamentals of game theory.
The group calls itself the “predictioneers” and plans to predict these outcomes by mathematically computing the probability of each using game theory. For example, in one method the group mathematically predicts the bargaining positions of all of the main “players” in the United Nations. To assign values to each of the players, the economists deduce how flexible each country can be on each issue and how influential each country can be over others. Once these values are gathered, they can be used in game theoretic models and ultimately produce predictions.
The article points out that there is the obvious issue of whether or not certain unpredictable human conditions can be taken into account when calculating these values (“Things like political momentum and reality of fatigued, hungover diplomats are tricky, if not impossible, to capture in game theory.”) Despite this, the article does admit that game theory has been used successfully in the past in these kinds of situations. In 2009, game theory was used to predict the outcome of the Copenhagen negotiations (namely, no legally binding policy regarding international climate action was made). Frans Stokman was the economist who predicted this—his models called for a “weak, voluntary agreement.” Additionally, economist Bruce Bueno de Mesquita predicted that the negotiations would be a “bust.”
The predictioneers are expected to reveal their results regarding the Paris negotiations before they begin in late November, and it remains to be seen just how accurate the models will be this time around.
Source: http://grist.org/news/can-game-theory-predict-what-will-happen-at-the-un-climate-negotiations/