Rooting United States’ Congressional Politics as Models of Game Theory
On October 18, 2021, the United States Senate voted to raise the debt ceiling to just below $29 trillion. The debt ceiling was first instituted in the United States in 1917 with the passing of the Liberty Bond Act. This legislation allowed the government to spend money in a less restrictive manner. But in recent administrations, it has been a point of immense controversy and tension across party lines.
In Planet Money’s recent episode “Two Indicators: Congressional game theory and the debt ceiling” the hosts explore how the nation’s politicians use principles of game theory to gain the upper hand of influence in today’s political climate. Currently, every politician in the United States is governed by the private incentive to act in a manner that will maximize their chances of getting reelected. One example of this is Alexandria Octavia Cortez announcing in a public news briefing that she would not vote for the bipartisan infrastructure bill without a reconciliation bill. An action like this is a strategic move to show voters her passion for party issues but puts immense pressure on her to follow through on her word, otherwise, she might lose trust from her political base. Every politician is making similar promises to their party, so when it comes time to vote on bills, each member knows the reward and cost if they fail to fulfill their desired goal. Their optimal strategy is based on measuring the incentives and costs of each action. For example, a senator may concede to the other side on an issue that might be less important to him with the underlying agreement that his proponent on the other side will do the same for him in the future.
The second example of the game theory discussed in the podcast is posing threats to get the opposing side to concede. It is then the job of each politician to decide if the threats are credible and formulate the best strategy based on this information. An example of this is one side threatening to let the highway budget expire. In this situation, the opposing side has to decide if they think their opponents’ threat is credible or a tactic to try and get them to concede. The side making the threat has an opposing dilemma in which they must weigh the costs of being blamed for the budget expiring with the power of dictating the policy.
The principles described in the podcast relate to our class discussion of game theory. In the course, we learn that there are many types of “games” each with its own set of unique strategies and outcomes. One core form of game theory is the study of the zero-sum game. In this game, only one player can win. Currently, many politicians act as if they believe that they are in a zero-sum game where only one party can win. This categorization is not necessarily true, as politicians are often in a coordination game. In this game setup, the players get the largest payoff when they both use the same strategy. In a political context, achieving agreement is challenging as it might require one side to concede their goal for the greater good. But looking in the long term, it may be the best action for both parties, along with the American people.
Reference: https://www.npr.org/transcripts/1048493458