How Game Theory Relates to the Mexican Drug War
In 2006, when Mexican President Felipe Calderon publicly declared war on Mexico’s drug cartels, he simultaneously severed illegal political protections fostered between politicians and cartels throughout the years. Sending 65,000 troops to “eradicate drug violence,” he sparked what would become one of the deadliest wars in narcotic history.
Within this conflict, there were two main players: the Gulf Cartel, led by Chapo Guzman, and the Sinaloa Cartel, led by Osiel Cardenas. These groups were the most powerful of the many, and were the primary targets of the Mexican government in their efforts to win the war on drugs. The cartels faced two options: fight against the government together, or fight separately. The current annual drug market is roughly $6 billion in profit; if both groups were to fight together, each would get to reap a $6 billion benefit, respectively. It became clear that between the shared benefit of increased protection and the monetary reward, fighting together was their best option. However, there was a catch: if one group chose to fight individually and access their opponents’ resources, they would reap a $10 billion award while their opponent would keep a mere $1.5 billion, a severe loss.
As discussed in lecture, this game theory situation presents very definitive “Hawk” and “Dove” tactics. If both groups chose dove (fighting together), they would get the shared benefit of $6 billion; whereas if they both chose hawk (fight individually), they “kill” their prey and both walk away with only $3 billion. The latter option, because they both cannot improve their respective situations by choosing differently, is a Nash Equilibrium. Thus, choosing to fight individually (the dominant strategy) is a best response under the assumption that your opponent has chosen the same option.
The author likens the hypothetical coalition of the two largest cartels to the cooperation of P&G and Unilever. This resource was intriguing, as it approached the prospect of the war on drugs from both the perspective of the government and the cartels. Of course, the groups ended up choosing the dominant strategy with the hope of maximizing their gain from $6 billion to $10 billion and elected not to work together. An interesting point was the fact that despite Mexico’s vast expenditures in the war on drugs, they still have come no closer to eradicating the threat of narcotics and their societal impact. This begs the question, what is the calculated risk of a government assuming drug cartels will most often choose a dominant strategy (“hawk”) over a “dove” strategy? Additionally, as of July 27th of this year, it is reported that the Sinaloa cartel has teamed up with a Romanian cartel in an effort to ship narcotics to the U.S. We can assume from this that the benefit the Sinaloas garner from doing business internationally outweighs their initial reservations about teaming up with the Gulf cartel, who could not offer this transatlantic opportunity and merely stood to knock their potential profit down to $1.5 billion. Thus, we can assume the risks that the international business the Sinaloas are involved with puts them in a position of losing less than $1.5 billion, their potential loss if they were to fall prey to the Gulf cartel’s hawk strategy.
link: http://cms.uhd.edu/faculty/redlt/edgarseniorproject.pdf