Game Theory and the Cold War
Game theory’s importance accelerated at a tremendous pace around the time of the second world war. Though its applications had so far largely been in the field of economics, both the Soviet Union and the United States saw the immense potential for the use of game theory in war strategies.
At first the US Eisenhower administration viewed nuclear weapons like any other disposable weapon from their arsenal – only stronger. Thomas Schelling, a game theorist, convinced officials that they were much more useful as deterrents. He also proposed a variety of different responses that the US should call upon depending on the size of the offense against it. Later, in 2005 he was awarded the Nobel Memorial Prize in Economics for “having enhanced our understanding of conflict and cooperation through game-theory analysis”.
The Soviet Union adopted similar tactics. Eventually, a ‘Mutual Assured Destruction (MAD)’ balance was struck, in which neither nation could gain advantage through nuclear attack for fear of reprisal. This is highly representative of how game theory affects interactions in the real world. If one nation changed the balance of power through any particular action, would it lead to a strategic blunder that would result in nuclear war? But, on the other hand, there wasn’t any logical reason to launch nuclear weapons after your nation had already taken a significant hit.
As prisoner’s dilemma shows us, both players must assume the other is only concerned with self-interest. Therefore, each must limit risk by adopting a dominant strategy. Fortunately, neither nation was willing to play the final stages of the game, which would have seen mass death and destruction.
http://www.classicsofstrategy.com/Schelling-Arms-and-Influence-Essay.pdf
http://science.howstuffworks.com/game-theory5.htm
https://www.researchgate.net/profile/Esther-Mirjam_Sent/publication/24084380_Some_like_it_cold_Thomas_Schelling_as_a_Cold_Warrior/links/0f31752d671820d3b8000000.pdf