Thursday, March 20, 2014

Game theory in Ukraine: Monopoly v chess - The Economist


After Russia began sending unmarked troops into Crimea over the weekend of March 1st, the Russian stock market fell 10.8%. In America a fall of that magnitude would anger a wide array of shareholders, from ordinary citizens to asset managers to companies themselves, and this dissatisfaction could filter back to political leaders via the democratic process

People in search of a metaphor to describe the difficulty of coping with Russia these days often describe Vladimir Putin as playing chess, while the West plays some less-complicated type of game. In fact, in game-theory terms, chess is fairly simple: it is a two-person zero-sum game, where one side wins what the other side loses. More complicated games have multiple players and more than one dimension of play. In Monopoly, for example, money and territory are not the same thing, and players may form shifting alliances to maximise common interests. (Of course, in the end, one player gradually sucks up all the money and strangles the others, which may be how Russian nationalists see the West these days.) It might be more helpful to say that the West is playing Monopoly, while Mr Putin is playing chess. Mr Putin has responded to Mr Obama's offer to negotiate a possible trade of Marvin Gardens for Indiana Avenue by advancing his rook and taking an exposed pawn. How should America deal with this? Garry Kasparov, a guy who knows a fair amount about chess, recommends a series of measures that are far harsher than anything America is currently contemplating. The West might have preferred to play a non-zero-sum, multiplayer game with Mr Putin, but if he keeps playing chess, we will eventually have to start playing too.