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SOME APPLICATIONS

OF THE GAME THEORY IN THE POLITICS

RÃZVAN VICTOR PANTELIMON*

Abstract. This paper tries to present some applications of the game theory
in politics, and at the same time, to analyze the weak points of these
theories, and the prospects of this method in political science. We shall
concentrate on the use of game theory in the transitions’ processes and in
the formation of the social capital, and eventually we shall analyze an
article by Matthew Rabin published in “American Economic Review” in
1993 titled “Incorporating Fairness into Game Theory and Economics”
in order to see how the concept of “fairness” could be applied to some
classical games (prisoner’s dilemma, chicken game, etc).

Keywords: prisoner’s dilemma, chicken game, game theory in politics,


political science revisited, reforma pactada.

During the last years both political science scholars and politicians tried to
build their explanations or propositions on economic approaches, such as rational
choice and game theory. From coalitions formation and functioning to democratic
transitions and consolidations, from economics to international relations, etc.,
and game theories, which can be defined as the analysis of strategic interactions,
all are to explain the strategic behavior of the players which interact motivated
by the utility maximization, considering that the others participants are rational.
This paper tries to present some applications of the game theory in politics,
and at the same time, to analyze the weak points of these theories, and the
prospects of this method in political science. We shall concentrate on the use of
game theory in the transitions’ processes and in the formation of the social
capital, and finally we shall analyze an article by Matthew Rabin published in
“American Economic Review” in 1993 titled “Incorporating Fairness into Game
Theory and Economics” in order to see how the concept of “fairness” could be
applied to some classical games (prisoner’s dilemma, chicken game, etc.).
Game theory begins with the works of Zermelo in 1913, which show that
games like chess are resolvable. Von Neumann in the ’20s studied the minimax
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* PhD, researcher at the Romanian Academy, Institute of the Political Science and International Relations
and lecturer at the Ovidius University, Constanþa; pantelimonr@yahoo.com

Pol. Sc. Int. Rel., IX, 1, p. 87–93, Bucharest, 2012.


88 RÃZVAN VICTOR PANTELIMON 2

equilibriums in zero-sum games. It’s no doubt that the first important advance
was in 1944, with the publication of Van Neumann’s and Morgenstern book
“Theory of games and Economic Behavior” which give a general formalization
of the games, introducing the concept of “strategy” in extensive games and
proposing applications.
In the ’50s it was an important development of these theories, especially in
Princeton, with Shapley, which defined the concept of information, which allow
analyzing the cooperative games (that’s means that games in which the players
can establish contracts), and especially with Nash, which enounced the Nash
equilibrium, which permitted to extend the theory to the non-cooperative games.
After that, in the ’60s and ’70s, Harsany extended the game theory to the
incomplete information games, cases in which the players do not know all the
game characteristics.1
Initially, game theory predicted that social systems consisting of only utility-
maximizing rational individuals engaged in strategic interaction would stabilize
in equilibrium. The problem, however, was that the theory created space, for an
abundant number of such equilibrium states and that it could not predict which
equilibrium would be the one for particular system. Both complete cooperation
as well as complete defection could be the result. The theory thus showed that
“almost any outcome can occur”.2
Another problem arose between what game theory predicted and what empirical
observation revealed, namely, how different collective action problems are solved.
Rational choice theorists were able to show that, given their assumptions about
rational utility-maximizing behavior, it is incomprehensible that individuals ever
choose to collaborate to solve common problems. Since people do in fact solve
collective action problems and organize action groups (interest organizations,
political parties, states and even supranational organs), the question posed by rational
choice and game theory was indeed both fundamental and counterintuitive to the
way political scientists used to think about political organizations.3
Many scholars interested in democratic transitions use the game theory to explain
how different political actors interact in the process of transition and consolidation
of democracy. From a game-theoretical perspective, Adam Przeworski argued,
in a comparative analysis of the political and economical reforms in Eastern
Europe and Latin America that what secures democratic rule in new democracies
are the new political institutions offering the losing forces behind the earlier
authoritarian regime a fair chance for following their political interests, or even
(through fair elections) winning back political power in the future.4
Thus, if the forces behind the change to democratic rule design the new
democratic political institutions (the electoral system, for example) so as to deny
the old anti-democratic groups any chance of ever coming back to political
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1 Owen, Guillermo, Teoria jocurilor, Ed. Tehnica, Bucharest, 1974.
2 Rothsein, Bo, “Political Institutions: An Overview”, in Goodin, Robert E., Hans-Dieter Klingemann
(Editors), A New Handbook of Political Science, Oxford, Oxford University Press, 1996, p. 143.
3 Ibidem.
4 Przeworski, A., Democracy and the market: political and economic reforms in Eastern Europe and Latin
America. Cambridge University Press, Cambridge, 1991.
3 SOME APPLICATIONS OF THE GAME THEORY IN THE POLITICS 89

power — which is to say, if they act as the utility-maximizing rational agents


which the theory presumes them to be — they may end up with a political take-
over by the very authoritarian forces they tried to “design” out of power. Thus,
the principles of fairness, and not the instrumental rationality, should guide us in
the construction of political institutions.5
Similar approaches used also Jose Maria Colomer in a book, which analyzes
the Spanish transition process from a game theory point of view.6 He emphasizes
that in some situations when political actors interact, the winning option does not
reflect the unanimous and sincere support of all the parts, but is the result of
some occult options of the actors involved. In these cases the most important are
not principles like honesty, clear game, firm convictions, but the mutual concessions,
promises and threats, and the final result even it seems to be the consequence of
this cover interests, and not of the multilateral consensus.
Using the game theory, Colomer tries to analyze these convergent and divergent
relations around of a political option. He delimited basically alternatives for
every political actor or player and observed their strategical conducts. Using this
theory he explains some surprises aroused/caused by the empirical observations
and which seem incompressible if we only take account of the characteristics of
every actor. There are two types of games: cooperative and no-cooperative
games, with efficient or less efficient results, which permit to emphasize both
some deals between very different personalities and political groups, with very
different objectives, apparently irreconcilables, and some disagree between
actors with the same goals, and apparently interested in mutual cooperation.7
Colomer’s model used for Spanish transition, which can be defined like “reforma
pactada”, also can explain other transition processes, too. In this model we have
three players: the Government, the reformists and the adepts of continuity, but
no one has enough power to impose his project. That means that every player
must try to adopt a relative position, which allows him to interact whit others, in
order to obtain some favorable results for him. The internal dynamics of the
game makes that two of the actors, the reformists and the continuants, must
adopt not their first option, but the second one, which is more similar with the
Government one.8
With the game theory we can explain these behaviors of the political actors,
because in this process we have a paradox. If players adopt unilaterally the best
option for them, they obtain a worst result for both of them. If there is no
cooperation between the players in order to make an accord in favor of an option
mutually beneficial, each one decides for the option whiche thinks is better for
him, but the final result can be the worst for both. They can obtain a better result
if they cooperate.
This cooperation is possible only if there are rational expectations that the
other player will respect the accord, because cheating can produce an undesired
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5 Rothsein, Bo, “Political Institutions: An Overview”, in Goodin, Robert E., Hans-Dieter Klingemann
(Editors), A New Handbook of Political Science, Oxford University Press¸ Oxford, 1996, p. 156.
6 Colomer, Jose Maria, El arte de la manipulacion politica, Ed. Anagrama, Madrid, 1994.
7 Idem, p. 62.
8 Idem, p. 64-67.
90 RÃZVAN VICTOR PANTELIMON 4

result for the player which respects the deal. So, the cooperation requires a
combination between promises and threats. Here is one of the major problems of
the games like the Prisoner’s Dilemma: in any game the strategic behavior is
valued according to the resulting payoffs. The payoffs are dependent upon the
ability of the players to develop the proper answer to whatever of the moves the
opponents. “In the PD game, each player can reward (cell R=3, R=3), when the
opponent should be rewarded (when he cooperates), and alternatively, can
punish, that is cheat, when the opponents cheats (cell P=1, P=1). In terms of
ability, in this case, each one can do whatever the other one does: they are
perfectly equal. But PD game consists simultaneously in a different story. Player
1 can cheat and player 2 cannot punish (cell T=5, S=0), that is, cannot cheat. At
the same time, player 2 can cheat and player 1 cannot punish (cell S=0, T=5, that
is cheat. In the case of these two last cells, players are very unequal, that is, each
player is alternatively the stronger or the weaker one. This is the reason why I
consider the PD game as being indeterminate”9.
If the PD game was formed only by the cells based on equality it would have
been determined and the equilibrium would have been clear and reached in one
round. But the score of the game cannot be sure as long as the relative power of
the players it is not determinate. The equilibriums of the games are dependent on
the relative power of the players, which is also shaped by evolutionary forces.
The fact that there are many equilibriums which the individual coordinates, that
is, many social contracts, is due to the many equilibrium relative powers and not
to the possibility to consent on any equilibrium.
A PD game with “n” rounds explains a transition process and is a more realistic
description of the real life situation, because the possibility to meet again the
opponent, in an electoral process or other situation, develops reciprocity and this
makes cooperation sustainable. This logic rests on a basic implicit assumption:
the existence of the power to retaliate effectively that is the equal power to
discourage the opponent of any temptation to defect. But this cannot be taking it
for granted because power equality is just valid in different degrees for different
situations.
Rational choice theorists have sometimes stressed the role of iteration
(repeated play) in explaining why collective action occurs so often in the real
world, notwithstanding the motivation of rational self-interested agents not to
collaborate. However, iteration can only play a very limited role in explaining
co-operation. While iteration can indeed lead to stable co-operation between the
parties, it can result in stable non-cooperation between them as well; and rational
choice and game theory is at a loss to explain why the outcome is sometimes the
one and sometimes the other.10
Instead of iteration, political leaders have been shown to be important in solving
collective action problems. Leaders must enjoy a reputation for trustworthiness
————————
9 Fudulu, Paul, Fundamental ideas in economic theory of institutions, The Romanian Center for Consent
and Compared Economics, Bucharest, 2003, p. 69.
10 Rothsein, Bo, “Political Institutions: An Overview”, in Goodin, Robert E., Hans-Dieter Klingemann
(Editors), A New Handbook of Political Science, Oxford University Press¸ Oxford, 1996, p. 158.
5 SOME APPLICATIONS OF THE GAME THEORY IN THE POLITICS 91

among would-be members. They must have both the incentive and the capacity
to reward those who contribute their fair share and to punish those who do not.11
The problem is that rational choice or game theory is not particularly helpful for
identifying such leaders or specifying what it is that makes certain individuals in
certain situations become leaders.
This could be an explanation why the transitions process was so different,
although the basic principles are the same, a possible explanation could be that
in every case the relative positions of the political players in a democratization
process was very diverse and the relation of power between actors were different.
Another use of the game theory, especially of the cooperative games, is that
of Putnam in his famous work “Making Democracy Work. Civic Traditions in
Modern Italy”, in which Putnam investigated why public institutions, such as
the democratic system, function so differently in Italy’s twenty different regions.12
Putnam’s study yields the surprising result that it is the density and weight of
the local organizational network that is decisive for establishing and securing
efficient political institutions. The more people have been organized in such
bodies as choirs, bird-watching clubs, sports associations and so on, the better
democracy works. Citizens must, when deciding on common affairs (that is,
when engaging in politics), be prevailed upon to see not just to their own short-
term interest, but also to that of the whole — to the common good. This capacity,
according to Putnam, is something people can develop by taking part in voluntary
associations.13
Putnam’s feat involves demonstrating that this factor is more significant than
traditional socio-economic variables for explaining democracy’s manner of
operation. He claims that this civic spirit, as expressed in a dense organizational
network in the civil society, actually explains why certain regions have enjoyed
higher economic growth than others. The differential development of civic spirit
in the various regions better accounts for their present economic standing than
does their original economic position. It is not economic growth that produces
civic spirit, but rather civic spirit that produces economic growth (and functioning
democratic institutions).
According to Putnam, participation in organizational life creates social
capital, which enables interaction between citizens to be built on trust. That is to
say, that people choose to co-operate with their neighbors because they trust that
the they will co-operate, too. In the various networks of associational life, a binding
element arises in the form of norms facilitating cooperation. Expressed in economic
terms, social capital reduces transaction costs in the economy, costs associated
with ensuring that contracts are kept. Concretely, this is a matter of whether
agreements can be confirmed with a handshake, or whether scores of lawyers
and stacks of insurance policies are needed instead. It seems, then, that we have
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11 Colomer, Jose Maria, El arte de la manipulacion politica, Ed. Anagrama, Madrid, 1994, p. 77.
12 Putnam, Robert B., Making Democracy Work: Civic Traditions in Modern Italy, Princeton University
Press, Princeton, N.J, 1993.
13 Rothsein, Bo, “Political Institutions: An Overview”, in Goodin, Robert E., Hans-Dieter Klingemann
(Editors), A New Handbook of Political Science, Oxford University Press¸ Oxford, 1996, p. 151.
92 RÃZVAN VICTOR PANTELIMON 6

the solution here to the problem to which game theory has called our attention.
For, by taking part in a multitude of social networks and associations, individuals
can build up social capital, which solves the problem of collective action.
Until now, analyzing some of the applications of the game theory in politics
we assumed that only the purely economically considerations must be taken into
account, without consideration for “the sentiments” of the actors. We have seen
in Putnam’s study that other forces like the civic spirit, the mutual trust, the grade
of altruism or egoism etc., influence our decisions. Another concept similar with
that used by Putnam is “fairness” put in theory by Matthew Rabin in an article
from 1993.14
In Rabin opinion the same person could be altruist with other persons which
are altruistic too, but in the same time want to prejudice the persons which try to
prejudice him. The people are willing to sacrifice their welfare in order to help
the ones that are seen as favorable and to prejudice the ones that are seen as
egoists. At the same time this motivations have more important applications if
the cost of the sacrifice is lesser. If we apply this theory to the Prisoner’s
Dilemma game we can observe some differences towards the classical solutions.
In the conventional game the only equilibrium was when the two prisoners
prejudice each other by cheating, and if we incorporate the “fairness” concept in
this game is possible that a player sacrifices himself in order to help the other.
The Nash equilibrium (non-cooperation) can be understood in the same
“fairness” logic: if both players are hostile to each other, their lack of cooperation
can be seen as a wish to prejudice the other, no matter which is the cost.
As a conclusion of this article we can say that: all Nash equilibriums in
mutual-max or mutual-min is an “fairness” equilibrium; if the pay-offs are little
the “fairness” equilibrium is between mutual-max — mutual-min; if the pay-offs
are big the “fairness” equilibrium is approximate in the Nash equilibrium.
The most important point of this article is the one that Rabin introduces in the
conventional games some pay-offs which are not present in the pay-offs matrix,
in other words, the game theory, especially in politics or in social life, must not
the existence of other pay-off which are not materials.
We have tried in this work to emphasize that “game theory” can be used to
explain many processes which occure in the social and political life. Nevertheless,
the application of this theory to politics is more complex and more complicated
that a mathematical model, because politics involves living people. The concept
of “fairness” and the introduction of other non-material pay-offs could give a
more complex image on the game theory applications.
The present study is limited to present, an apparently didactic manner the
game theory in politics, and in fact to review, with the well-defined theoretical
tools, a theory less presented in the Romanian space as a possible diagnostic and
“treatment” for the present political dysfunctional. This is why the present study
only puts into dialogue different theories on the subject and it does not propose
to find strengths or weaknesses of a theory which has remained at a level of
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14 Rabin, Matthew, “Incorporating Fairness into Game Theory and Economics”, in American Economic
Review, no. 83, December 1993.
7 SOME APPLICATIONS OF THE GAME THEORY IN THE POLITICS 93

abstraction and was brought rarely into contact with difficult situations. A theory
that in the Romanian political space may find applicability appealing to a
president-player, politically translated (for example, in the context of Liviu
Negoita or Klaus Johannis nomination for prime minister) into a potential exit
strategy from Chicken Game of relieving the situation. Into an attempt to “laboratory
testing” the “prisoner’s dilemma”, using the PNL and PSD, one can notice that
if the game is played once, the chances are for each individual prisoner to opt for
cooperation (in 2008 PSD agreed to collaborate with PDL although initially it
had gone on a variant in which PNL and PSD were allied in trying to force the
accession to power despite opposition from the president). If the game is played
between the same partners, for many times, it appears that participants get to
finding it more convenient, opting for non-cooperation (in a possible case study
proposed, the rational response would be to refuse cooperation with the
President and his party). The higher the repetition number is (tending to infinity)
the “partners” options converge towards a greater loyalty option. Is very interesting
that one of the most famous game Prisoner’s Dilemma has an paradox: two
ignorant people, knowing nothing about game theory, will chose to non-
cooperate because they know there are no facts against them, and the result of
this behavior is that they obtain the best result for both. If they use game theory
and analyze which is the dominant strategy for them and after that they chose to
cooperate, finally they get a bigger period of prison.15
The strength of game theory is to emphasize that “human nature” has many
latent possibilities: which of them are realized in any given situation depends
largely on the structural incentive that it exhibits. Thus, peaceful coexistence
may degenerate with remarkable rapidity into violent conflict if fuelled by fear,
especially fear of pre-emptive attack.

SELECTIVE BIBLIOGRAPHY

Colomer, Jose Maria, El arte de la manipulacion politica, Ed. Anagrama, Madrid, 1994;
Goodin, Robert E., Hans-Dieter Klingemann (Editors), A New Handbook of Political Science,
Oxford University Press, Oxford, 1996;
Fudulu, Paul, Microeconomie. Postiniþial ºi master, Ed. Hiroyuki, Bucureºti, 1997;
Fudulu, Paul, Fundamental ideas in economic theory of institutions, The Romanian Center for
Consent and Compared Economics, Bucureºti, 2003;
Owen, Guillermo, Teoria jocurilor, Ed. Tehnicã, Bucureºti, 1974;
Przeworski, A., Democracy and the market: political and economic reforms in Eastern Europe
and Latin America. Cambridge University Press, Cambridge, 1991;
Putnam, Robert B., Making Democracy Work: Civic Traditions in Modern Italy, Princeton
University Press, Princeton, N.J, 1993;
Rabin, Matthew, “Incorporating Fairness into Game Theory and Economics”, in American Economic
Review, no. 83, December 1993.

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15 Fudulu, Paul, Microeconomie. Postiniþial ºi master, Ed. Hiroyuki, Bucureºti, 1997, p. 152.

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