What Game Theory Tells Us About Boris Johnson’s Brexit Strategy
This article analyzes the recent actions of Boris Johnson and looks to determine if the new UK Prime Minister would actually go through with a no-deal Brexit. Johnson has repeatedly pledged to leave the European Union by the October deadline with or without a deal in an attempt to pressure the EU and secure a better deal for Britain. But would he actually take such drastic action when the time comes?
As of now, many do not believe the Prime Minister would go through with his hard-line approach, noting the high stakes involved with a no-deal Brexit. This is the primary reason the EU has yet to re-negotiate a better offer to the troubled nation. If he wants to bring the EU back to the negotiating table, Johnson must establish the credibility of his position. He must convince the world that he is serious about leaving the Union by the deadline with or without a deal.
In treating this conflict as a game, we consider Johnson and the EU as players where Johnson can either accept or reject a deal and the EU can either re-negotiate an offer or stick to its current deal. During a situation of conflict, it makes sense for one side to raise the stakes in hopes of getting the other side to back down. This is what Nobel laureate game theorist Thomas Schelling called the “madman theory.”
In the case of Brexit, Johnson has been raising the stakes in hopes of convincing the EU that he would leave with no deal. He appointed hard-line Brexiters to his cabinet to establish a commitment to leave the EU regardless of a deal and has spent significant amounts (in excess of $45 billion) to prepare the UK for a no-deal Brexit. The Prime Minister has also intensified government preparations and has started engaging with the US on a possible trade deal with this eventuality in mind. Perhaps most indicative of his conviction to a no-deal Brexit was his unprecedented decision to suspend Parliament until October 14, leaving little time for any opposing MPs to take action before the Brexit deadline.
One can also liken this conflict between Johnson and the EU to a game of chicken, in which two cars head towards each other with each driver seeking to not be the first to swerve out of the way. In waiting longer, you become more credible and can convince your opponent that you will not be the first to yield, but a crash becomes increasingly likely the longer the game goes on. Here, we see a payoff matrix for the game of chicken, where each player would prefer winning over tying, tying over losing, and losing over crashing:
In the context of Brexit, crashing is analogous to the UK going through with Brexit without a deal — both sides lose. Any prospect of compromise largely depends on the credibility of Johnson to not accept a deal until a better one is offered and the EU to not offer a better deal. If the EU starts believing that Johnson may actually leave without a deal, they could return to the negotiating table. Likewise, if time ticks on without the Prime Minister gaining any ground on a better deal, he may yield his position and accept the deal offered by the EU. However, as we move closer to the October 31 Brexit deadline without a deal in place, we can only hope that this game of chicken does not end in a crash of historic proportions.
