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Game Theory Take On - Washington’s Rogue Elephants

60 points by asnyder 15y ago

asnyder 15y ago
I thought this was an interesting article as it's more analysis than it is political commentary, something the hacker news community could enjoy from an analytical perspective.
- jessriedel 15y ago
  This article is a pseduo-analytical wrapper around an extremely partisian stance: My political opponents are irrational idiots (literally mad elephants), having purposely made themselves incapable of rational cooperation. Therefore, I will take the high road as the morally upright and rational person I am. The key thing about the game of chicken is that it is symmetric. And, in fact, the current budget debate is more-or-less so: both the president and the house republicans must agree; it either rejects the deal, there is a terrible consequence for everyone. (It's possible, of course, to argue that one side will come out worse, to break the symmetry, but the article makes no attempt to justify such a claim.) Declaring one side crazy and the other side righteous is hardly analysis.
  - donall 15y ago
    "Literally" mad elephants? ;) http://xkcd.com/725/ http://xkcd.com/725/
    - jessriedel 15y ago
      "Literally" referred to the fact that the OP literally called them mad elephants, not that they literally are .
      - donall 15y ago
        I was just reminded of that xkcd comic and thought I would share. I wasn't actually trying to start an argument about the usage of the term "literally" (which is why I'm not continuing it!). In any case, I would have thought the comic portrays the person doing the correcting in a crazy enough light to show disdain for the practice...
  - demallien 15y ago
    The situation isn't symmetric - the President will just invoke the 14th Amendment and bump up the debt ceiling next week if needs be. It's just that the Democrats seem to have decided to use this issue to demonstrate to the voting public just how unreasonable the Republicans have become in negotiations, by trying to negotiate when they don't even need to. Looking at recent polling results, the strategy seems to be working.
    - checker 15y ago
      Can you explain how Obama could invoke the 14th? After reading it, it doesn't seem to mention any executive powers (IANAL, I am curious though).
    - bd_at_rivenhill 15y ago
      There's one big flaw in any plan to unilaterally increase the debt ceiling: it's not really clear whether that would be legal. You could make a reasonable argument on either side, and the final arbiter would be the Supreme Court, which is not particularly liberal these days. Nobody who wants a safe investment would buy the new treasury debt issued under those conditions without a significant risk premium above what they are paying now; I certainly wouldn't touch it with a 10 foot pole without a couple of hundred basis points of spread over the current yield. Not something the government would want to lock itself into for 2 years to avoid skipping some Social Security payments.
      - demallien 15y ago
        It's true that it isn't cut and dried whether or not the 14th can be invoked, which means that any attempt to use the 14th would likely end up in the Supreme Court. It is also true that the Supreme Court is not terribly liberal at the moment. But, fortunately enough for the US and the world, raising the debt ceiling is not a 'liberal' cause - it's something that G.W. Bush, G. Bush, R. Reagan and others from the conservative side of politics have seen fit to do. It is not likely (in my opinion) that the Supreme Court would follow Tea Party rhetoric against the advice of every economics advisor out there. In other words, I think that ending up in the Supreme Court is pretty much a win for anyone that thinks the debt ceiling needs to be raised...
  - khafra 15y ago
    Tea Party-leaning legislators have constituents who actually want them to shut down the Federal Government, so they have less to lose than those legislators beholden to sane voters. The problem is, once your opponent in this game of chicken has visibly guzzled a fifth of bourbon and torn off his steering wheel, it's too late for you to do the same.
    - ars 15y ago
      You are falling into the same trap. You see them wanting to shut down the goverment and decided they are insane. They have perfectly sane reasons for wanting that - you just don't agree. And if you are unable to see that, then the fault lies with you, not with them.
      - khafra 15y ago
        Whether they're sane by some objective standard is irrelevant to this understanding of the underlying game theory. If someone handcuffs himself to you on the edge of a cliff and starts dancing a jig, he has the upper hand in negotiations, for pretty much anything he wants to negotiate.
        ars 15y ago
        You are still stuck. You think they are doing things just to annoy you, or for no reason at all. They are choosing things because they think it's the best thing to do. But you seem incapable of realizing that someone may actually have a different opinion about something. You seem to think that if they have a different opinion it must mean that they are not rational.
      - albedoa 15y ago
        They have perfectly sane reasons for wanting that Name one.
        ars 15y ago
        Why are you asking me? Go ask them. And whatever answer they give you, if you think that it's not a sane reason then the problem lies with you, not with them. It's hard, but eventually you will learn to accept that other people have different opinions about things - even things that seem totally obvious to you.
karmalizer 15y ago
The article's pretty short on analyzing what game best models the current debates. My vote would be for the ultimatum game, but that ignores the element of time in their decisions. Time is a huge factor in this game, so it probably isn't even that great of a model. Wikipedia has a pretty comprehensive list here: http://en.wikipedia.org/wiki/List_of_games_in_game_theory http://en.wikipedia.org/wiki/List_of_games_in_game_theory
- evandijk70 15y ago
  The author makes several comparisons with the game of chicken http://en.wikipedia.org/wiki/Game_of_chicken http://en.wikipedia.org/wiki/Game_of_chicken
tomjen3 15y ago
So how could he stop playing the game? Simply give up on raising the debt ceiling? That doesn't seem like it would give a good outcome.
- Astrohacker 15y ago
  It would be terrible in the short run, but it would be vastly better in the long run. Presently, the US is on the unsustainable trajectory of acquiring debt until it defaults. Not raising the debt ceiling would immediately end this problem. Is it better to have a smaller catastrophe now, or a bigger catastrophe later?
  - paganel 15y ago
    > It would be terrible in the short run, but it would be vastly better in the long run. Presently, the US is on the unsustainable trajectory of acquiring debt until it defaults. Some of us have been saying this ever since Bear&Stearns went down, in the spring of 2008, that you cannot just prop up an non-solvent bank/country/whatever. At that time all the "bright" economists were saying things like "it's only a liquidity problem, we just need to grease the system with a little more printed money and things will be just fine" (which they finally did, after Lehman's collapse), while now they're saying things like "let's just raise the debt ceiling this one more time to allow the FED to print more money and things will be just fine". Well, if things have turned up to be "just fine" first time around how did we "evolve" from the level of "Wall-Street bank going into default" to "the first military power of the Earth possibly going into default" ? To this question the bright economists don't have any answer, apart from stupid things like "we should have printed more money".
    - bd_at_rivenhill 15y ago
      Eventually there will be a good deal of money printing involved in solving this problem, especially given the paucity of options available for fixed-income investors with a low appetite for risk (what, would you prefer the Euro or the Yen?), but it will never be the case that the US will have a solvency problem in the same way as Bear Stearns or Greece because they can always print their way out of it with inflation as the downside. Inflation is still very tame relative to the period between 1972 and 1982, and it is very unlikely that we will see contributory mistakes of the magnitude of imposing price controls and eliminating the link to gold during the upcoming period.
xradionut 15y ago
This is an interesting article, but the game isn't chicken, what is happening in Washington is a dance of distraction. Most of the damage to the economy is already done, the public is just waiting for the "leadership" to finally drive the rotting ship into the iceberg. No matter how much the rational and historically educated among us yell "The emperor has no clothes", we are powerless against the interests that have dominated over the last thirty years.
- anonymoushn 15y ago
  You've written this in such a way that any reader will either think he or she is familiar with the your ideas or have no clue what your ideas are. Could you elaborate?
ars 15y ago
Good article - up until the point where he claims the Republicans are the "rogue elephants". To the other side the Democrats are the "rogue elephants", and it's interesting that the author appears incapable of seeing that. A truly irrational person is a rare thing. If you are unable to explain the actions of your opponent in any other way then the fault lies within you, not them.
- Retric 15y ago
  I think he is calling Republicans "rogue elephants" because they have split into dysfunctional elements is reasonable. When significant portions of their party are not willing to make any deal they lose their majority standing in the house and are forced to act as a minority party in both the house and senate. PS: A basic functional strategy would be to block any Democratic bill in the senate and then pass a poison pill in the house which they can then present as the "only option to avoid default". Instead their only option is compromising in the Senate so they can get enough Dem support in the House to pass something. However, they are still acting like they can pass something in the House and blocking legislation in the Senate.
  - jpadkins 15y ago
    They did pass a bill, the debt ceiling is tied to a balanced budget amendment.
    - eftpotrm 15y ago
      Which is frankly ridiculous grandstanding. If nothing else, a quick look at exactly how the deficit developed will reveal the hollowness of current pleas from some wings of the Republican party for a balanced budget amendment: http://www.nytimes.com/2011/07/24/opinion/sunday/24sun4.html http://www.nytimes.com/2011/07/24/opinion/sunday/24sun4.html
      - jpadkins 15y ago
        caps on future spending and a balanced budget amendment is ridiculous grandstanding? keep in mind the group that passed this bill were not in the congress 2 years ago, let alone 10. Also keep in mind the republican leadership that was in office the last 10 years did not endorse or get behind the cut, cap, balance bill either. T
erikb 15y ago
Giving oponents a reasonable percentage of irrational behaviour is actually a normal thing in game theory. Game theory doesn't stop to apply because someone on this planet acts irrational to gain an advantage. I like to think more in terms of finding the rationale behind the "irrational behaviour". That the truthfully out of mind elephant acts this way because the cost of a failure really doesn't matter to him at that moment. If u don't care about the losses, maximising the win percantage actually is quite rational. And in a game of chicken the best chances of winning are of course if you really don't stop, ever. The only reason why most people stop before the crash, is that they worry about the cost of a failure might be bigger to them then the possible win of a success.
- ars 15y ago
  That's, by definition, not irrational behavior. It would be better called "nothing to loose behavior", but of course in the real world that's pretty rare, and certainly does not apply to the politicians in the current situation.
  - erikb 15y ago
    Agreed, if they threaten something like a nuclear bombing. Let's think about another situation: At a family party there is one piece of cake left and 2 people want to eat it. Both people recognise the interest of the other one and try to offer it to the other one, but both now don't try to take it in fear of losing face. In some way you can also apply a chicken game situation here. Or another example: 2 gay men sit in a bar, see each other and consider the other one attractive. They look at each other and smile at each other. But who should make the first step? (Had to take 2 equal partners, with woman and man it is too likely that culture expects the man to act) In both situation neither the price nor the cost is that high, that relatively(!), extrem actions (like being actively impolite, or just sit there and wait in the bar until the other one makes the move) can and should be expected. I'm not into politics that much, that I could give meaningful examples there, but I think according to the situation and threats each party makes, it happens more often then you might think with just these high stakes situations in mind.
vbtemp 15y ago
> The president is best advised to do the same: declare that the other side has foregone all pretense at rational legitimacy, and simply proceed to govern as best he can for the good of the country. This is seriously how the article ends? How does the author suggest he do that, considering one house is controlled by these "rogue elephants". That's the important question. Professor Captain Obvious hasn't really contributed anything new by labeling the republicans as a much of crazy animals...

60 points by asnyder 15y ago

I thought this was an interesting article as it's more analysis than it is political commentary, something the hacker news community could enjoy from an analytical perspective.

jessriedel 15y ago
This article is a pseduo-analytical wrapper around an extremely partisian stance: My political opponents are irrational idiots (literally mad elephants), having purposely made themselves incapable of rational cooperation. Therefore, I will take the high road as the morally upright and rational person I am. The key thing about the game of chicken is that it is symmetric. And, in fact, the current budget debate is more-or-less so: both the president and the house republicans must agree; it either rejects the deal, there is a terrible consequence for everyone. (It's possible, of course, to argue that one side will come out worse, to break the symmetry, but the article makes no attempt to justify such a claim.) Declaring one side crazy and the other side righteous is hardly analysis.
- donall 15y ago
  "Literally" mad elephants? ;) http://xkcd.com/725/ http://xkcd.com/725/
  - jessriedel 15y ago
    "Literally" referred to the fact that the OP literally called them mad elephants, not that they literally are .
    - donall 15y ago
      I was just reminded of that xkcd comic and thought I would share. I wasn't actually trying to start an argument about the usage of the term "literally" (which is why I'm not continuing it!). In any case, I would have thought the comic portrays the person doing the correcting in a crazy enough light to show disdain for the practice...
- demallien 15y ago
  The situation isn't symmetric - the President will just invoke the 14th Amendment and bump up the debt ceiling next week if needs be. It's just that the Democrats seem to have decided to use this issue to demonstrate to the voting public just how unreasonable the Republicans have become in negotiations, by trying to negotiate when they don't even need to. Looking at recent polling results, the strategy seems to be working.
  - checker 15y ago
    Can you explain how Obama could invoke the 14th? After reading it, it doesn't seem to mention any executive powers (IANAL, I am curious though).
  - bd_at_rivenhill 15y ago
    There's one big flaw in any plan to unilaterally increase the debt ceiling: it's not really clear whether that would be legal. You could make a reasonable argument on either side, and the final arbiter would be the Supreme Court, which is not particularly liberal these days. Nobody who wants a safe investment would buy the new treasury debt issued under those conditions without a significant risk premium above what they are paying now; I certainly wouldn't touch it with a 10 foot pole without a couple of hundred basis points of spread over the current yield. Not something the government would want to lock itself into for 2 years to avoid skipping some Social Security payments.
    - demallien 15y ago
      It's true that it isn't cut and dried whether or not the 14th can be invoked, which means that any attempt to use the 14th would likely end up in the Supreme Court. It is also true that the Supreme Court is not terribly liberal at the moment. But, fortunately enough for the US and the world, raising the debt ceiling is not a 'liberal' cause - it's something that G.W. Bush, G. Bush, R. Reagan and others from the conservative side of politics have seen fit to do. It is not likely (in my opinion) that the Supreme Court would follow Tea Party rhetoric against the advice of every economics advisor out there. In other words, I think that ending up in the Supreme Court is pretty much a win for anyone that thinks the debt ceiling needs to be raised...
- khafra 15y ago
  Tea Party-leaning legislators have constituents who actually want them to shut down the Federal Government, so they have less to lose than those legislators beholden to sane voters. The problem is, once your opponent in this game of chicken has visibly guzzled a fifth of bourbon and torn off his steering wheel, it's too late for you to do the same.
  - ars 15y ago
    You are falling into the same trap. You see them wanting to shut down the goverment and decided they are insane. They have perfectly sane reasons for wanting that - you just don't agree. And if you are unable to see that, then the fault lies with you, not with them.
    - khafra 15y ago
      Whether they're sane by some objective standard is irrelevant to this understanding of the underlying game theory. If someone handcuffs himself to you on the edge of a cliff and starts dancing a jig, he has the upper hand in negotiations, for pretty much anything he wants to negotiate.
      - ars 15y ago
        You are still stuck. You think they are doing things just to annoy you, or for no reason at all. They are choosing things because they think it's the best thing to do. But you seem incapable of realizing that someone may actually have a different opinion about something. You seem to think that if they have a different opinion it must mean that they are not rational.
    - albedoa 15y ago
      They have perfectly sane reasons for wanting that Name one.
      - ars 15y ago
        Why are you asking me? Go ask them. And whatever answer they give you, if you think that it's not a sane reason then the problem lies with you, not with them. It's hard, but eventually you will learn to accept that other people have different opinions about things - even things that seem totally obvious to you.

karmalizer 15y ago

The article's pretty short on analyzing what game best models the current debates. My vote would be for the ultimatum game, but that ignores the element of time in their decisions. Time is a huge factor in this game, so it probably isn't even that great of a model. Wikipedia has a pretty comprehensive list here: http://en.wikipedia.org/wiki/List_of_games_in_game_theory http://en.wikipedia.org/wiki/List_of_games_in_game_theory

evandijk70 15y ago
The author makes several comparisons with the game of chicken http://en.wikipedia.org/wiki/Game_of_chicken http://en.wikipedia.org/wiki/Game_of_chicken

tomjen3 15y ago

So how could he stop playing the game? Simply give up on raising the debt ceiling? That doesn't seem like it would give a good outcome.

Astrohacker 15y ago
It would be terrible in the short run, but it would be vastly better in the long run. Presently, the US is on the unsustainable trajectory of acquiring debt until it defaults. Not raising the debt ceiling would immediately end this problem. Is it better to have a smaller catastrophe now, or a bigger catastrophe later?
- paganel 15y ago
  > It would be terrible in the short run, but it would be vastly better in the long run. Presently, the US is on the unsustainable trajectory of acquiring debt until it defaults. Some of us have been saying this ever since Bear&Stearns went down, in the spring of 2008, that you cannot just prop up an non-solvent bank/country/whatever. At that time all the "bright" economists were saying things like "it's only a liquidity problem, we just need to grease the system with a little more printed money and things will be just fine" (which they finally did, after Lehman's collapse), while now they're saying things like "let's just raise the debt ceiling this one more time to allow the FED to print more money and things will be just fine". Well, if things have turned up to be "just fine" first time around how did we "evolve" from the level of "Wall-Street bank going into default" to "the first military power of the Earth possibly going into default" ? To this question the bright economists don't have any answer, apart from stupid things like "we should have printed more money".
  - bd_at_rivenhill 15y ago
    Eventually there will be a good deal of money printing involved in solving this problem, especially given the paucity of options available for fixed-income investors with a low appetite for risk (what, would you prefer the Euro or the Yen?), but it will never be the case that the US will have a solvency problem in the same way as Bear Stearns or Greece because they can always print their way out of it with inflation as the downside. Inflation is still very tame relative to the period between 1972 and 1982, and it is very unlikely that we will see contributory mistakes of the magnitude of imposing price controls and eliminating the link to gold during the upcoming period.

xradionut 15y ago

This is an interesting article, but the game isn't chicken, what is happening in Washington is a dance of distraction. Most of the damage to the economy is already done, the public is just waiting for the "leadership" to finally drive the rotting ship into the iceberg. No matter how much the rational and historically educated among us yell "The emperor has no clothes", we are powerless against the interests that have dominated over the last thirty years.

anonymoushn 15y ago
You've written this in such a way that any reader will either think he or she is familiar with the your ideas or have no clue what your ideas are. Could you elaborate?

ars 15y ago

Good article - up until the point where he claims the Republicans are the "rogue elephants". To the other side the Democrats are the "rogue elephants", and it's interesting that the author appears incapable of seeing that. A truly irrational person is a rare thing. If you are unable to explain the actions of your opponent in any other way then the fault lies within you, not them.

Retric 15y ago
I think he is calling Republicans "rogue elephants" because they have split into dysfunctional elements is reasonable. When significant portions of their party are not willing to make any deal they lose their majority standing in the house and are forced to act as a minority party in both the house and senate. PS: A basic functional strategy would be to block any Democratic bill in the senate and then pass a poison pill in the house which they can then present as the "only option to avoid default". Instead their only option is compromising in the Senate so they can get enough Dem support in the House to pass something. However, they are still acting like they can pass something in the House and blocking legislation in the Senate.
- jpadkins 15y ago
  They did pass a bill, the debt ceiling is tied to a balanced budget amendment.
  - eftpotrm 15y ago
    Which is frankly ridiculous grandstanding. If nothing else, a quick look at exactly how the deficit developed will reveal the hollowness of current pleas from some wings of the Republican party for a balanced budget amendment: http://www.nytimes.com/2011/07/24/opinion/sunday/24sun4.html http://www.nytimes.com/2011/07/24/opinion/sunday/24sun4.html
    - jpadkins 15y ago
      caps on future spending and a balanced budget amendment is ridiculous grandstanding? keep in mind the group that passed this bill were not in the congress 2 years ago, let alone 10. Also keep in mind the republican leadership that was in office the last 10 years did not endorse or get behind the cut, cap, balance bill either. T

erikb 15y ago

Giving oponents a reasonable percentage of irrational behaviour is actually a normal thing in game theory. Game theory doesn't stop to apply because someone on this planet acts irrational to gain an advantage. I like to think more in terms of finding the rationale behind the "irrational behaviour". That the truthfully out of mind elephant acts this way because the cost of a failure really doesn't matter to him at that moment. If u don't care about the losses, maximising the win percantage actually is quite rational. And in a game of chicken the best chances of winning are of course if you really don't stop, ever. The only reason why most people stop before the crash, is that they worry about the cost of a failure might be bigger to them then the possible win of a success.

ars 15y ago
That's, by definition, not irrational behavior. It would be better called "nothing to loose behavior", but of course in the real world that's pretty rare, and certainly does not apply to the politicians in the current situation.
- erikb 15y ago
  Agreed, if they threaten something like a nuclear bombing. Let's think about another situation: At a family party there is one piece of cake left and 2 people want to eat it. Both people recognise the interest of the other one and try to offer it to the other one, but both now don't try to take it in fear of losing face. In some way you can also apply a chicken game situation here. Or another example: 2 gay men sit in a bar, see each other and consider the other one attractive. They look at each other and smile at each other. But who should make the first step? (Had to take 2 equal partners, with woman and man it is too likely that culture expects the man to act) In both situation neither the price nor the cost is that high, that relatively(!), extrem actions (like being actively impolite, or just sit there and wait in the bar until the other one makes the move) can and should be expected. I'm not into politics that much, that I could give meaningful examples there, but I think according to the situation and threats each party makes, it happens more often then you might think with just these high stakes situations in mind.

vbtemp 15y ago

> The president is best advised to do the same: declare that the other side has foregone all pretense at rational legitimacy, and simply proceed to govern as best he can for the good of the country. This is seriously how the article ends? How does the author suggest he do that, considering one house is controlled by these "rogue elephants". That's the important question. Professor Captain Obvious hasn't really contributed anything new by labeling the republicans as a much of crazy animals...