North Korea and America in a Nash Equilibrium?
With North Korea’s announcement of a successful hydrogen bomb test, a new turn of North Korea tension has been evoked. At the same time, gold price keeps going up. While lots of people comment on the close relationship between two incidents, Goldman Sachs, an American multinational finance company, claims that they are not related. In the article, Goldman Sachs claims that North Korea is at an equilibrium.
As mentioned in class, a Nash equilibrium is reached when no player in a game has anything to gain by changing only his own strategy. In this case, to simplify the problem, we can see the two players we have as North Korea and the United States. Both players have two options, to attack or not. As in prisoners’ dilemma, both countries have payoff based on different combinations of actions. The U.S. has not had a lot of interactions with North Korea yet, but it is obvious that if North Korea chooses to attack, it may trigger a huge retaliation by other countries that it does not have the capacity of fighting against with. However, it does not want to give up on developing the weapons. Thus, in my opinion, this is not quite a Nash equilibrium yet. North Korea is still changing its ability by developing weapons.
However, the case is not that simple as a game in which you only play once and get a payoff. Both two players, North Korea and the United States, have to consider the outcomes of their actions, even for the future. For example, if North Korea chose to attack now, what would happen in 5 years? There are also other players including Asian countries such as Japan and China, and European players such as Germany. Both North Korea and the United States need to take the influence of their actions into account, given that theoretically, every country is playing for itself. Of course, once after the countries decide future payoffs, it is possible for them to find solutions by game theory.
Therefore, the complicated problem may seem simple if we put a game theory model in it. However, the game still has a lot of elements that we need to consider about, and probably when the two countries finally reach prisoners’ dilemma, something new will happen.