Why We Have to Sanction Putin – A Game Theory Analysis
Source: How Game Theory Explains Why We Have to Sanction Putin — Even If It’s Costly – POLITICO
Moshe Hoffman and Erez Yoeli, the authors of “How Game Theory Explains Why We Have to Sanction Putin” argue that sanctioning Russia is beneficial in the long run. The authors discuss and debunk a commonly used decision tree that describes the invasion of Ukraine, which I reformatted as a matric for visibility. Within this decision tree, Russia first makes the decision to transgress and invade Ukraine, or to not transgress and remain at peace with Ukraine. The United States has the option to punish Russia with sanctions or not punish Russia with sanctions.
The model is intended to suggest how Russia and the United States should act from a greedy standpoint. Russia’s benefit from invading Ukraine, the damage Russia occurs as a result of US sanctions, the effect of the invasion of Ukraine on the United States, and the amount damage the United States sustains while sanctioning Russia are the key criteria behind this model. According to the singular pure Nash equilibria, Russia should transgress, and the United States should not punish Russia for its actions. Russia’s dominant strategy is to transgress and attack Ukraine while the United States is best off cutting its losses and letting Russia do as it pleases.
Fortunately for Ukraine, the United States spends billions of dollars on aid packages and upholds costly sanctions against Russia that outweigh the benefits Russia gets from invading Ukraine. According to the authors, the United States chooses to support Ukraine and is not acting against its interest because the model is missing one key attribute – it does not account for the United States’ desire to influence Russia’s future actions towards future favorable outcomes. If a term that accounts for Russia’s tendency to base its actions off anticipated US reactions is added, the model would become more effective.
The authors do not explain how to implement this idea within the article. I believe that adding new parameters that increase the United States’ payoff when it responds properly to Russia and decrease the United States’ payoff when it responds improperly could allow the model to perform better. I added a suggestion for an adjusted model below.
