Asymmetrical Information

From the desk of Mindles H. Dreck:

Game Theory and The State of The Union

Many pundits have been reacting to the State of the Union, particularly Bush's singling out North Korea, Iran and Iraq for harsh criticism and referring to them using World War II terminology. Pundits debate whether this amounts to a "unilateral" declaration of war, and worry over the effect on European relations etc. I think they are missing the point. The speech was about making credible threats against terrorism. The intended audiences for this remark were terrorist regimes and those wavering at home. And the purpose was to increase the credible threat power of the U.S.

Sports writers such as James Campion will tell you that Muhammad Ali put on his crazy act at weigh-ins deliberately:

Flailing about like a lunatic, and braying like a wild banshee, The Kid planted the seed of doubt. He whipped himself into a frenzy. “Float like a butterfly, sting like a bee!” he screamed the day of the weigh-in. In front of the Miami Boxing Commission, former champions, Joe Louis and Sugar Ray Robinson, and hundreds of reporters, he concluded the frantic show with a prediction of an eight-round knockout. After the near riot in the crowded room, the writers gave The Kid little chance. The Bear did not agree. “Only a crazy man wouldn’t be afraid of Liston,” said writer, Robert Lipsyte. “Ali convinced the champ he was entering the ring with one of the craziest.”

If you can convince your opponent that you have little regard for rules, convention or your own well-being, you have a leg up in the fight. Some think Tyson is up to this as well, although it would seem to have backfired. You have to admit, though, it is definitely scary. If I had to fight, I'd rather fight someone with a sense of self-preservation.

Game Theory, as developed by Von Neumann, and formalized by figures such as John Nash (update: relevant link here), provides a framework for this sort of action. Game Theory describes the potential outcome of a contest between a limited number of players, each attempting to "split up a pie" or maximize the utility of an outcome. An important mechanism that helps define the outcome is "threat power". Threat power is the ability of one player to damage another net of the other player's ability to damage him. If you don't care about your life (or your things, your family, convention, public opinion, etc.), you can sustain little damage, in utility terms. Any damage you can inflict is a threat power advantage.

That threat power advantage is the problem with terrorists. If terrorists cared about themselves, their neighbors, or their homeland and citizens, they really wouldn't be terrorists. Given some decent explosives, they can damage any democratic sovereign state far more than they can be damaged. As is demonstrated in this analysis of a highjacking, any progress towards their ends will inspire a never-ending chain of terrorism. It's all gain, and no loss, from the terrorist perspective.

The United States is restrained by world opinion, by domestic opinion, by its democratic nature, by its concern for civilian casualties and by its respect for our world's conventions. These are all good things, but they reduce our threat power.

While Bush's speech made us all a little nervous, it was intended to make terrorist sponsors nervous. The jangling of European nerves was a side effect. This was a forceful speech intended to show terrorist regimes and dictators that:

a) we won't necessarily be restrained by a need to please Europe or other parts of the world, and

b) we won't be restrained by waiting for an open act of aggression on your part.

The point was to increase our threat power. It would not have been effective if it weren't as jarring as it was. A credible threat can save lives, avoid conflict and increase bargaining power, however unattractive and realpolitik it may seem. A threat can actually eliminate the need for action rather than make it necessary. And certain critics need to wake up and notice that we haven't actually gone to war without consulting their governments first, we're just saying we reserve the right to do so. In Iran's case, a strong threat may actually push them in our direction, if we make the alternative unpleasant enough.

Think about it. If so many Arabs from Egypt and Saudi Arabia feel so strongly about eliminating Israel, why don't they get together and invade? Because the Israelis have made it very clear they will kill the families, children and countrypeople of any aggressor without compunction the minute they see the threat. Israel has shown they will not be restrained by others' opinions or the possibility of escalation. Think about how they bombed Iraq's nuclear reactors. That's one of a few reasons the U.S. is so often the target of more organized terrorist groups. Up until now, we've been more restrained in our reaction.

Steven den Beste has been making this point all along - the point is not to please everyone, the point is to put some fear in these guys:

It is not possible for us to convert hatred into friendship, but we can convert contempt into dread.

Show them you will hit them wherever it hurts most. Game Theory just puts it in an analytical framework.

One of game theorists' favorite incidents to analyze is the Cuban Missile Crisis. Here's another example.

ADDENDUM - Feb. 6: And here's a note for those of you who are here due to my recent "antiwar" link:

You'll notice several items in the screed you just read that aren't in quotes. That would be because I didn't say them (!). For instance:

1) "there's no real need to worry". There's lots of reason to worry, both because these terrorist states have us in their sights, and because addressing the threat they pose is necessarily a high risk, high stakes game. As some of my articulate correspondents have noted, there are times threats have worked (the Cuban Missile Crisis) and times they have been reduced to meaningless bluster. Hopefully, this time is not one of the latter.

2) "Declaration of war" - there was no declaration of war - at least from our side..

Whether you like it or not, Game theory is a legitimate way to examine geopolitics, taught in graduate schools and discussed in Foreign Affairs and such. Because it is merely an analytical framework, however, it renders no judgement on the actions of the players. It merely attempts to analyze the conditions that lead to success or failure (as determined by each player advancing their own interests) The analysis is amoral, which appears to be what has driven the author to distraction, and he has projected that amorality onto yours truly.

We use tools like this all the time. When one looks at the cost of a social program, or a medical treatment, it is necessary to specify how many lives are saved or improved vs. the cost. In most cases, saving the last life or addressing the last grievance is prohibitively expensive. That doesn't make the analysis moral or immoral, it just means that there is a moral decision to be made once the analysis is done. But it is important to measure the chances of success as well as examine our method of achieving it. History is full of examples of success in advancing interests achieved by immoral means.

If you are interested, another source of power in game theory is coalition-building. Our coalition-building power appears to have been insufficient thus far to combat terrorism and neutralize the threat power advantage of terrorists and terror-sponsoring regimes.

The comparison to Ali and Tyson was made only to illustrate the concept of changing threat power. I can find some agreement with Mr. Raimondo that, in the sphere of international relations, we should not behave like boxers preparing for a fight.

Finally, my reaction to this:

Well, put this in an analytical framework, Andreas – and you too, Ms. Postrel: because Americans do care about their lives, their things, their families, their conventions (otherwise known as morality), public opinion – and their constitutional form of government. Which is why this "crazy man" strategic perspective can only be deployed by a terrorist or a totalitarian.

That's exactly my point, thank you for making it again. These terrorists and thugocracies have one primary source of power - they can live with many awful consequences of their actions and we by definition cannot. A successful war on terrorism would ramp up the cost in their cost/benefit analysis to the point where at least those with some semblance of rationality would choose to pursue their objectives in some other way. We need to experiment and innovate to neutralize the terrorists' advantage.

There are many levers to push in an attempt to increase the perceived costs of aggression against us and our allies, such as sanctions, financial isolation and international pressure. But one cannot deny that the perception that we are willing to use force quickly, and suffer significant costs to ourselves in doing so is one of those levers. We must both threaten and use force with discretion.

A threat that one does not have to make good on is called a "deterrent". I hope we will find deterrents that are both successful and moral in the coming months and years. This is a risky business, fraught with worry - and it was so long before the State of the Union.

One thing about deterrents - if they are successful it's not obvious. I happen to believe the horrible prospect of mutual assured destruction was a net contributor to stability in the latter half of the twentieth century. Since it can only be compared to a hypothetical alternative, and since it is a behavioral theory (like game theory)we cannot prove that.

We will never construct a society or set of rules such that it is no longer necessary to consider how to advance our interests. There is no final state, only progress. However, a dynamic system of free, wealth-generating democracies advancing their interests, can improve everyone's lot.

Also - one quick word defending libertarianism from the antiwar interpretation: Libertarianism allows for limited government. One of government's legitimate roles is to defend our citizens and advance our sovereign interests. I don't see an inconsistency in a libertarian examining and possibly supporting this legitimate role of government. We aren't "antigovernment" (or dare I say "antigovernment.com") we're in favor of limited government.

Posted by Mindles H. Dreck at January 31, 2002 10:07 PM | Technorati inbound links