War Games

I am always curious about  things unknown. taking this  into account, it wounldn’t be  a bad idea to show us some social issues,

Which of course i
think are of importance but fun as well.


War games

Oct 13th 2005

From The Economist
print edition

A big pay-off for
two game theorists

THIS year’s Nobel
prize for economics might almost have doubled as the prize for peace.
On October 10th, three days after the International Atomic Energy
Agency and its director-general, Mohamed ElBaradei, won their laurels
for monitoring the misuse of nuclear power, the economics prize was
bestowed on two scholars whose best work was also done in the shadow
of the mushroom cloud.

Robert Aumann, of
Hebrew University, and Thomas Schelling, of the University of
Maryland, are both game theorists. Game theory is now part of every
economist’s toolkit and has been recognised by the Nobel award
before, when John Harsanyi, John Nash and Reinhard Selten shared the
honour in 1994. It is the study of what happens when the calculating,
self-interested protagonist of economic fable meets another member of
his kind. In such encounters, neither party can decide what to do
without taking into account the actions of the other.

During the cold
war, two protagonists that captured game theorists’ imaginations were
the United States and the Soviet Union. How each of these nuclear
adversaries might successfully deter the other was the most pressing
question hanging over Mr Schelling’s classic work, “The Strategy of
Conflict”, published in 1960. The book ranged freely and widely in
search of an answer, finding inspiration in gun duels in the Old
West, a child’s game of brinkmanship with its parents, or the safety
precautions of ancient despots, who made a habit of drinking from the
same cup as any rival who might want to poison them.

Mr Schelling’s
back-of-the-envelope logic reached many striking conclusions that
appeared obvious only after he had made them clear. He argued that a
country’s best safeguard against nuclear war was to protect its
weapons, not its people.
A country that thinks it can withstand a
nuclear war is more likely to start one. Better to show your enemy
you can hit back after a strike, than to show him you can survive
one. Mr Schelling invested his hopes for peace not in arms reductions
or fall-out shelters but in preserving the ability to retaliate, for
example by putting missiles into submarines.

All-out
thermonuclear warfare is the kind of game you get to play only once.
Other games, however, are replayed again and again. It is these that
fascinate Mr Aumann. In a repeated encounter, one player can always
punish the other for something he did in the past. The prospect of
vengeful retaliation, Mr Aumann showed, opens up many opportunities
for amicable co-operation. One player will collaborate with another
only because he knows that if he is cheated today, he can punish the
cheat tomorrow.

Mutually assured
co-operation

According to this
view, co-operation need not rely on goodwill, good faith, or an
outside referee. It can emerge out of nothing more than the cold
calculation of self-interest. This is in many ways a hopeful result:
opportunists can hold each other in check. Mr Aumann named this
insight the “folk theorem” (like many folk songs, the theorem has
no original author, though many have embellished it). In 1959, he
generalised it to games between many players, some of whom might gang
up on the rest.

Mr Aumann is loyal
to a method—game theory—not to the subject matter of economics
per se. His primary affiliation is to his university’s delightfully
named Centre for Rationality, not its economics department. Trained
as a mathematician, he started out as a purist—pursuing maths for
maths’ sake—but soon found his work pressed into practical use.
Between 1965 and 1968, for example, he co-wrote a series of reports
for the United States Arms Control and Disarmament Agency. The
Russians and Americans were pursuing gradual, step-by-step
disarmament. But the military capabilities of each superpower were so
shrouded in mystery that neither side knew precisely what game they
were playing: they did not know what their opponents were prepared to
sacrifice, nor what they themselves stood to gain. Without knowing
how many missiles the Russians had, for example, the Americans could
not know whether an agreement to scrap 100 of them was meaningful or
not.

In such games, Mr
Aumann pointed out, how a player acts can reveal what he knows. If
Russia were quick to agree to cut 100 missiles, it might suggest its
missile stocks were larger than the Americans had guessed. Or perhaps
the Russians just wanted the Americans to think that. Examples of
such deception are not limited to the cold war. Some have speculated
that Saddam Hussein pursued a similar strategy in the run-up to the
invasion of Iraq in 2003. Despite apparently having no actual weapons
of mass destruction left, he offered only the most grudging
co-operation to weapons inspectors. The Iraqi dictator perhaps wanted
to conceal the humiliating fact that he had nothing much to hide
.

Messrs Aumann and
Schelling have never worked together, perhaps because the division of
labour between them is so clear. Mr Aumann is happiest proving
theorems; Mr Schelling delights in applying them. Mr Aumann operates
at the highest levels of abstraction, where the air is thin but the
views are panoramic. Mr Schelling tills the lower-lying valleys,
discovering the most fertile fields of application and plucking the
juiciest examples.

In one of his more
unusual papers, Mr Aumann uses game theory to shed light on an
obscure passage in the Talmud, which explains how to divide an asset,
such as a fine garment, between competing claimants. You should give
three-quarters to the person who claims all of it, and the remaining
quarter to the person who claims half of it, the text instructs,
somewhat inscrutably
. Fortunately, the Nobel committee had no need
for such a complicated rule in dividing up its prize. Between its two
equally deserving laureates, it split the SKr10m ($1.3m) fifty-fifty.

About linpx
He is lazy, so he left nothing here.

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