

Game Theory Take On - Washington’s Rogue Elephants - asnyder
http://www.nytimes.com/2011/07/27/opinion/27Barash.html

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karmalizer
The article's pretty short on analyzing what game best models the current
debates. My vote would be for the ultimatum game, but that ignores the element
of time in their decisions. Time is a huge factor in this game, so it probably
isn't even that great of a model.

Wikipedia has a pretty comprehensive list here:
<http://en.wikipedia.org/wiki/List_of_games_in_game_theory>

~~~
evandijk70
The author makes several comparisons with the game of chicken

<http://en.wikipedia.org/wiki/Game_of_chicken>

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erikb
Giving oponents a reasonable percentage of irrational behaviour is actually a
normal thing in game theory. Game theory doesn't stop to apply because someone
on this planet acts irrational to gain an advantage. I like to think more in
terms of finding the rationale behind the "irrational behaviour". That the
truthfully out of mind elephant acts this way because the cost of a failure
really doesn't matter to him at that moment. If u don't care about the losses,
maximising the win percantage actually is quite rational. And in a game of
chicken the best chances of winning are of course if you really don't stop,
ever. The only reason why most people stop before the crash, is that they
worry about the cost of a failure might be bigger to them then the possible
win of a success.

~~~
ars
That's, by definition, not irrational behavior.

It would be better called "nothing to loose behavior", but of course in the
real world that's pretty rare, and certainly does not apply to the politicians
in the current situation.

~~~
erikb
Agreed, if they threaten something like a nuclear bombing. Let's think about
another situation: At a family party there is one piece of cake left and 2
people want to eat it. Both people recognise the interest of the other one and
try to offer it to the other one, but both now don't try to take it in fear of
losing face. In some way you can also apply a chicken game situation here. Or
another example: 2 gay men sit in a bar, see each other and consider the other
one attractive. They look at each other and smile at each other. But who
should make the first step? (Had to take 2 equal partners, with woman and man
it is too likely that culture expects the man to act) In both situation
neither the price nor the cost is that high, that relatively(!), extrem
actions (like being actively impolite, or just sit there and wait in the bar
until the other one makes the move) can and should be expected. I'm not into
politics that much, that I could give meaningful examples there, but I think
according to the situation and threats each party makes, it happens more often
then you might think with just these high stakes situations in mind.

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asnyder
I thought this was an interesting article as it's more analysis than it is
political commentary, something the hacker news community could enjoy from an
analytical perspective.

~~~
jessriedel
This article is a pseduo-analytical wrapper around an extremely partisian
stance: My political opponents are irrational idiots (literally _mad
elephants_ ), having purposely made themselves incapable of rational
cooperation. Therefore, I will take the high road as the morally upright and
rational person I am.

The key thing about the game of chicken is that it is symmetric. And, in fact,
the current budget debate is more-or-less so: both the president and the house
republicans must agree; it either rejects the deal, there is a terrible
consequence for everyone. (It's possible, of course, to argue that one side
will come out _worse_ , to break the symmetry, but the article makes no
attempt to justify such a claim.) Declaring one side crazy and the other side
righteous is hardly analysis.

~~~
demallien
The situation isn't symmetric - the President will just invoke the 14th
Amendment and bump up the debt ceiling next week if needs be. It's just that
the Democrats seem to have decided to use this issue to demonstrate to the
voting public just how unreasonable the Republicans have become in
negotiations, by trying to negotiate when they don't even need to. Looking at
recent polling results, the strategy seems to be working.

~~~
bd_at_rivenhill
There's one big flaw in any plan to unilaterally increase the debt ceiling:
it's not really clear whether that would be legal. You could make a reasonable
argument on either side, and the final arbiter would be the Supreme Court,
which is not particularly liberal these days. Nobody who wants a safe
investment would buy the new treasury debt issued under those conditions
without a significant risk premium above what they are paying now; I certainly
wouldn't touch it with a 10 foot pole without a couple of hundred basis points
of spread over the current yield. Not something the government would want to
lock itself into for 2 years to avoid skipping some Social Security payments.

~~~
demallien
It's true that it isn't cut and dried whether or not the 14th can be invoked,
which means that any attempt to use the 14th would likely end up in the
Supreme Court. It is also true that the Supreme Court is not terribly liberal
at the moment. But, fortunately enough for the US and the world, raising the
debt ceiling is not a 'liberal' cause - it's something that G.W. Bush, G.
Bush, R. Reagan and others from the conservative side of politics have seen
fit to do. It is not likely (in my opinion) that the Supreme Court would
follow Tea Party rhetoric against the advice of every economics advisor out
there. In other words, I think that ending up in the Supreme Court is pretty
much a win for anyone that thinks the debt ceiling needs to be raised...

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michaelfeathers
To me, it's not even clear that it would end up with a decision in the Supreme
Court given the political questions doctrine and the fact that's hard to
imagine who would have standing. I think that the worst that would happen is
long impeachment proceedings.

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xradionut
This is an interesting article, but the game isn't chicken, what is happening
in Washington is a dance of distraction. Most of the damage to the economy is
already done, the public is just waiting for the "leadership" to finally drive
the rotting ship into the iceberg. No matter how much the rational and
historically educated among us yell "The emperor has no clothes", we are
powerless against the interests that have dominated over the last thirty
years.

~~~
anonymoushn
You've written this in such a way that any reader will either think he or she
is familiar with the your ideas or have no clue what your ideas are. Could you
elaborate?

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ars
Good article - up until the point where he claims the Republicans are the
"rogue elephants". To the other side the Democrats are the "rogue elephants",
and it's interesting that the author appears incapable of seeing that.

A truly irrational person is a rare thing. If you are unable to explain the
actions of your opponent in any other way then the fault lies within you, not
them.

~~~
jbooth
Have you paid attention to what's going on at all? Republicans are rejecting a
plan that's significantly to the right of their initial demands. And they're
currently pushing for a bill that reduces the deficit _less_ than the
democrats' plan, with the twist that the limit has to be reauthorized multiple
times before the next election. Just to insure that congress doesn't
accomplish anything and the markets are uncertain going into election 2012.

Splitting the difference is a major problem here. The Republicans are
incentivized to be as crazy as possible because attitudes like yours, and most
editorial boards will just split the difference assuming 2 valid points of
view. So the crazier you are, the further the split will be in your direction.

~~~
sciurus
For those interested, summaries and comparisons of the plans currently in the
House and Senate, the positions of Obama and Boehner when negotiations broke
down on the 22nd, two bipartisan senate plans, and the earlier House
Republican plan are all viewable at
[http://www.nytimes.com/interactive/2011/07/22/us/politics/20...](http://www.nytimes.com/interactive/2011/07/22/us/politics/20110722-comparing-
deficit-reduction-plans.html)

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tomjen3
So how could he stop playing the game? Simply give up on raising the debt
ceiling?

That doesn't seem like it would give a good outcome.

~~~
Astrohacker
It would be terrible in the short run, but it would be vastly better in the
long run. Presently, the US is on the unsustainable trajectory of acquiring
debt until it defaults. Not raising the debt ceiling would immediately end
this problem. Is it better to have a smaller catastrophe now, or a bigger
catastrophe later?

~~~
paganel
> It would be terrible in the short run, but it would be vastly better in the
> long run. Presently, the US is on the unsustainable trajectory of acquiring
> debt until it defaults.

Some of us have been saying this ever since Bear&Stearns went down, in the
spring of 2008, that you cannot just prop up an non-solvent
bank/country/whatever.

At that time all the "bright" economists were saying things like "it's only a
liquidity problem, we just need to grease the system with a little more
printed money and things will be just fine" (which they finally did, after
Lehman's collapse), while now they're saying things like "let's just raise the
debt ceiling this one more time to allow the FED to print more money and
things will be just fine". Well, if things have turned up to be "just fine"
first time around how did we "evolve" from the level of "Wall-Street bank
going into default" to "the first military power of the Earth possibly going
into default" ? To this question the bright economists don't have any answer,
apart from stupid things like "we should have printed more money".

~~~
bd_at_rivenhill
Eventually there will be a good deal of money printing involved in solving
this problem, especially given the paucity of options available for fixed-
income investors with a low appetite for risk (what, would you prefer the Euro
or the Yen?), but it will never be the case that the US will have a solvency
problem in the same way as Bear Stearns or Greece because they can always
print their way out of it with inflation as the downside. Inflation is still
very tame relative to the period between 1972 and 1982, and it is very
unlikely that we will see contributory mistakes of the magnitude of imposing
price controls and eliminating the link to gold during the upcoming period.

~~~
Astrohacker
Is inflation tame according to the Fed calculations which ignore expenses that
matter to people like oil, or according to meaningful calculations? Because it
sure seems to me that the prices I pay are rising pretty quickly. Quickly
enough that I can notice it. A cup of coffee that cost $1.95 a couple of years
ago now costs $2.30. And I'm not earning any more money than I was then, so I
can feel the difference.

~~~
eftpotrm
Including oil in inflation costs distorts the picture though.

The standard response to inflation is to suppress demand within the economy to
make price rises unsupportable and dampen things down. When the inflation is
due to factors that are external to the economy though, such as a global spike
in commodity prices, this measure is largely ineffectual; the dampening effect
on global market prices is insignificant compared to the dampening effect on
the internal economy. You only end up suppressing your own economic growth to
your own cost while seeing a small at best effect on inflation in the
commodity that was causing the inflation for which you're trying to control.

Oil prices are rising for perfectly sensible global reasons, get used to it.
This is causing inflation you can't control and which the economy can't afford
to compensate for; your standard of living _will_ drop. If you want to avoid
this, work harder to earn more; it's the only way out.

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vbtemp
> The president is best advised to do the same: declare that the other side
> has foregone all pretense at rational legitimacy, and simply proceed to
> govern as best he can for the good of the country.

This is seriously how the article ends? How does the author suggest he do
that, considering one house is controlled by these "rogue elephants". That's
the important question. Professor Captain Obvious hasn't really contributed
anything new by labeling the republicans as a much of crazy animals...

