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How Game Theory Explains Gridlock

https://www.theatlantic.com/politics/archive/2013/01/how-game-theory-explains-washingtons-horrible-gridlock/267142/

The author, Mohamed El-Erian, postulates that the gridlock occurring in American politics can be analyzed from a game theory approach by stating that there is an observable Nash equilibrium as a result of dueling ideologies. He states that the Nash equilibrium is exemplified by Republicans and Democrats viciously debating a meaningful piece of legislation only to push it back further; draft a secondary “mini bargain”; and sign a meaningless piece of legislation. This leaves both parties even more bitter externally as well as internally than they were prior to debating. He states that this occurs due to personal incentives not aligning with collective incentives, an uneven distribution of information, and a mutual doubt between the parties that they will follow their respective promises. He then links this issue in Congress to the “persistence of sluggish growth and high unemployment.”

 

While the author does not explicitly reference the concept of Nash equilibrium, his entire argument lies on the principle, which he posits is the cause of gridlock in American politics. The only manner in which to ameliorate this issue would be to fix the underlying causes of this Nash equilibrium, such as realigning personal and collective incentives. This would change the payoffs of each decision thus creating a new Nash equilibrium. One could also change the structure of the game; however, this would be significantly harder since in this particular instance, the game refers to passing legislation. The author describes this Nash equilibrium as a positive feedback loop since it breeds more contentiousness between the parties. This change may be easier to theorize than to create; however, it would, in accordance with Game Theory, incentivize meaningful decisions to be made.

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