Wednesday, June 17, 2009

Game Theory in Canadian Politics (2)

I'd been contemplating writing a lengthier elaboration of my previous post, complete with payoff matrices and nash equilibriums, but Andrew Steele saves me the trouble, with a great run down of the game of election chicken we're in, from a game theory perspective. It's well worth a read.

However, any sort of "chicken" analysis assumes that an election is the equivalent of driving off a cliff or a head-on collision - the worst-case lose-lose scenario for both parties. And if that's the case, there's no way we're heading towards an election. The cost of backing down is so minimal that any rational person, and many New Democrats, could reach a deal to avoid driving off the cliff ("here's my plan", "we've agreed to talk", "we're all committed to making parliament work", blah, blah, blah). Unlike the game of chicken, we're in a game with communication and bargaining, which makes a compromise to avoid a lose-lose the logical outcome. As much as we'd like to think of politicians as hot headed rebels without a cause, they'll usually do what's in their best self-interest.

No, the only way we'll speed into an election is if the Liberals or Conservatives see the head-on collision as their best case scenario. If they both see it as their best case scenario, then we'll definitely be into an election next week.

It's hard to say if an election is in either of their interests. You could argue that one either way over and over again and reach a different conclusion each time. But, given the number of meetings they've had so far, it certainly looks like neither of them wants it. And if that's their assessment of the situation, it shouldn't be overly difficult for them to agree on a compromise.

2 Comments:

  • Well done Dan.

    By Blogger James Bowie, at 11:38 AM  

  • The Harper-Ignatieff standoff is not a chicken game, and the analogy is inappropriate for the big two parties. An election is unlikely to be a bad outcome for both Ignatieff and Harper because, broadly speaking, the one's loss is the other's gain.

    For this to be a chicken game, the "drive off a cliff" option has to be the worst option for all parties.

    Moreover, such a result takes place only if you assume your opponent is reasonable, and will "swerve to avoid the cliff" at the last second.

    That kind of stipulation only makes sense in a simultaneous move game. Well parliamentary votes are not simultaneous move - Harper is a first-mover, he presents his budget/confidence motion (makes his move), and Ignatieff reacts to it. Ignatieff would know whether Harper swerved or not before making a decision himself.

    "It's hard to say if an election is in either of their interests. You could argue that one either way over and over again and reach a different conclusion each time. But, given the number of meetings they've had so far, it certainly looks like neither of them wants it. And if that's their assessment of the situation, it shouldn't be overly difficult for them to agree on a compromise."

    To reach that conclusion you can't just look at a static game. For both players the best possible result involves an election in the future. For Ignatieff, in the Fall. For Harper, after an economic recovery.

    It isn't that an election today would make both worse off. It would make Ignatieff somewhat better off and Harper somewhat worse off. It is that compromise makes both a little better off today, and opens up the possibility for either to be a lot better off in the future.

    What Harper will need to do in the Fall is avert an election at all costs. His best bet is working with the NDP, and I think that is a long-shot.

    By Blogger hosertohoosier, at 1:04 PM  

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