Game Theory Insights into Britain’s EU Drama
Richard Fairchild’s article, “Game Theory Offers Better Way Forward in Britain’s EU Drama” provides valuable insights to use game theory to view the referendum on Britain’s EU membership. He introduced the idea of a “non-credible threat” that he says the British Prime Minister is making. Cameron asserted that “if the other leaders agreed to the UK’s demands for concessions, he would be able to convince the British public to vote to remain in the EU”. But his thread stands neglected by the EU because they do not believe that he has the power to influence the outcome. In addition, he notes that the Leave campaigners are voting to leave to “use it as a bargaining chip against an EU desperate for Britain to stay”. However, this turns out to be the classic Hawk-Dove game discussed in class where the Nash Equilibrium is when one player behaves aggressively, and the other behaves passively. It looks like the UK ended up being the passive one in this game.
On the other hand, Fairchild also presents an interesting idea about the role emotion plays in game theory. In class, when analyzing game theory, we have always been discussing it in the context of each player would do everything in his/her interest. This models human beings as unemotional and fully rational. However, when making decisions in real life humans may have emotions and affection towards each other. Fairchild states that research shows adding empathy to the Prisoner’s Dilemma can transform the outcome to a win-win situation for both players. Applying that to the EU and Britain scenario, if both sides showed empathy to each other, they might have achieved a better situation than what is now.
Link: http://phys.org/news/2016-06-game-theory-britain-eu-drama.html