Thinking about this situation in terms of game theory isn’t terribly illuminating. The academic discipline that goes by the name is a branch of mathematics founded in the interwar years by the brilliant polymath John von Neumann, who was also involved at Los Alamos in the construction of the first atomic bomb. According to Neumann’s theory, human beings make rational choices aiming to achieve results that are best for each of them. Applied in the context of the post-war nuclear stand-off, the theory produced “mutually assured destruction” – the balance of terror that has prevented full-scale war between nuclear-armed states. It has also been applied widely in economics and business management, and with some success.
The trouble with game theory is that it assumes human action is essentially strategic or instrumental in nature – in other words, that humans act in order to achieve some definite result or pay-off. In many situations this model fits reasonably well. It can be useful in thinking about how to get a pay rise, or bargain for a lower price when buying something you want. Politicians often apply game-theoretic strategies in their dealings with opponents, by presenting them with policy options that reveal their vulnerabilities, for example. Game theory can also be useful in military situations – not only nuclear stand-offs, but also in identifying targets of terrorist activity and computing the optimal paths of missiles.
But not all of human behaviour fits a model of strategic reasoning. We humans don’t act only in order to bring about results. We also act to express ourselves, to show the kind of human being we are or want to be. Behaviour of this expressive kind can be admirable and noble. It would be difficult to come up with compelling strategic reasons for Winston Churchill’s decision to lead Britain in fighting on against Nazism in May 1940. Churchill may have thought that Britain would be better off being defeated, even in strategic terms, than it would be if it reached some sort of compromise with Germany, since there was little reason to believe that Hitler would keep to the terms of any deal. But the real reason for Churchill’s decision was a conception of civilisation that precluded a shameful peace with the worst sort of barbarism. Fighting on was better, even if the consequence could be known in advance to be certain defeat.
Acting without regard to consequences is part of what it means to be human. By acting in this way we give meaning to our lives. But this human trait becomes dangerous when leaders pursue a project that not only can’t succeed, but is destroyed by the very process of trying to achieve it. The euro is one such project. It was known in advance that it couldn’t work. To go on with the project isn’t simply to compound the error that was made when the currency was set up. It’s an act of folly.
Having identified themselves with an unrealisable project, European leaders are committed to pursuing it to the bitter end. It’s not just their reputation and pensions that are at stake. The euro embodies a vision of an ideal Europe that has become part of the meaning of their lives. Conceived in the aftermath of World War Two, the European Union was meant as a way of leaving behind forever the conflicts between nation-states that had wracked the continent in the past. The paradox is that by pursuing this dream, Europe’s elites have locked themselves into a project that can only deepen Europe’s divisions and inflame the forces of nationalism.
John von Neumann 1903-1957
Born in Hungary, von Neumann was one of the world’s foremost mathematicians by his mid-20s
Pioneered game theory and was one of the conceptual inventors of the stored-program digital computer, alongside Alan Turing and Claude Shannon
Also performed pivotal work on quantum theory and the atomic bomb
Encyclopedia Britannica: John von Neumann
HOW THE GAME THEORY WORKS – INTERACTIVE GAMES ONLINE
BIMATRIX GAMES SOLVER
http://banach.lse.ac.uk/form.html (arbitrary number of strategies)
MATRIX GAMES SOLVER
http://banach.lse.ac.uk/form.html (at most 5×5 strategies)
REPEATED PRISONER DILEMMA
Repeated games of two players (for various strategies combinations):
Tournament (number scores of various strategies):
The evolution of a population with strategies in question:
Romano Pisciotti, surfing web