Game theory
Game theory draws on the rational choice theory of decision-making in order to create an abstract environment in which some quantitative models and formulas can be introduced into the theoretical study of state behavior. Game theory seeks to model situations in international relations in which cooperation between states is more likely or less likely, though its level of abstraction and demanding premises grant it little practical value to IR practitioners.
Game theory presents states as unitary actors with two available strategies (to cooperate or to cheat) and a dual goal of minimizing loss and maximizing gain. In a two-actor game, an ordinal pay-off structure is created based on four possible outcomes: mutual cooperation (M), mutual defection (O), unilateral cooperation by the first state (U) coupled with free-riding by the other (F), and unilateral cooperation by the second state (U) coupled with free-riding by the other (F).
M, O, F, and U are assigned numerical values in order to describe the basic pay-offs and preferences that states have in certain international environments. In a game called “Harmony,” M>F>U>O and cooperation is the default strategy for both states. In a game called “Prisoner’s Dilemma,” F>M>O>U and mutual cooperation is difficult, if not impossible, to achieve.
Although these games are not by necessity zero-sum, neorealist theorists have used game theory (in particular the Prisoner’s Dilemma model) to explain why cooperation between states is so difficult and why defection, free-riding, and “cheating” typically become dominant state strategies. In response, neoliberal institutionalists suggest that international institutions can increase cooperation between states and discourage cheating (F) in order to allow states to reach the optimal position and pay-off of mutual cooperation (M).
This contest between neorealists and neoliberals is also often framed in the absolute vs. relative gains debate. For example, mutual cooperation grants State 1 an absolute pay-off of M, but a relative pay-off of zero, that is, M minus M (because State 1 is sensitive to the relative gain that State 2 is making, State 2’s pay-off is subtracted from its own pay-off). In this case, there is no value in mutual cooperation, and only defection can grant a state a relative gain (F minus U), for F is always greater than U in the context of game theory.
Game theory also discusses states’ sensitivities to relative gains as coefficients in the mathematical calculation of pay-offs. In doing so, neorealists are able to convert nearly all game theory models into Prisoner’s Dilemmas, while other formulas have less drastic effects.
IR scholars have found that refinements such as iterated games that include the value of future cooperation would increase the applicability of game theory to real-life inter-state relations. Game theory is also criticized for its highly abstract and artificial theoretical nature as well as its assumptions of perfect rationality and perfect information. Although the introduction of quantitative measures is a step in the right direction for IR theory, it is a fair criticism that game theory does not in fact bridge the gap between abstract theory and empirical measurement.
Game theory presents states as unitary actors with two available strategies (to cooperate or to cheat) and a dual goal of minimizing loss and maximizing gain. In a two-actor game, an ordinal pay-off structure is created based on four possible outcomes: mutual cooperation (M), mutual defection (O), unilateral cooperation by the first state (U) coupled with free-riding by the other (F), and unilateral cooperation by the second state (U) coupled with free-riding by the other (F).
M, O, F, and U are assigned numerical values in order to describe the basic pay-offs and preferences that states have in certain international environments. In a game called “Harmony,” M>F>U>O and cooperation is the default strategy for both states. In a game called “Prisoner’s Dilemma,” F>M>O>U and mutual cooperation is difficult, if not impossible, to achieve.
Although these games are not by necessity zero-sum, neorealist theorists have used game theory (in particular the Prisoner’s Dilemma model) to explain why cooperation between states is so difficult and why defection, free-riding, and “cheating” typically become dominant state strategies. In response, neoliberal institutionalists suggest that international institutions can increase cooperation between states and discourage cheating (F) in order to allow states to reach the optimal position and pay-off of mutual cooperation (M).
This contest between neorealists and neoliberals is also often framed in the absolute vs. relative gains debate. For example, mutual cooperation grants State 1 an absolute pay-off of M, but a relative pay-off of zero, that is, M minus M (because State 1 is sensitive to the relative gain that State 2 is making, State 2’s pay-off is subtracted from its own pay-off). In this case, there is no value in mutual cooperation, and only defection can grant a state a relative gain (F minus U), for F is always greater than U in the context of game theory.
Game theory also discusses states’ sensitivities to relative gains as coefficients in the mathematical calculation of pay-offs. In doing so, neorealists are able to convert nearly all game theory models into Prisoner’s Dilemmas, while other formulas have less drastic effects.
IR scholars have found that refinements such as iterated games that include the value of future cooperation would increase the applicability of game theory to real-life inter-state relations. Game theory is also criticized for its highly abstract and artificial theoretical nature as well as its assumptions of perfect rationality and perfect information. Although the introduction of quantitative measures is a step in the right direction for IR theory, it is a fair criticism that game theory does not in fact bridge the gap between abstract theory and empirical measurement.
posted by machiavelli at 3:00 PM
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