G

Game Theory

Game theory is an application of mathematical reasoning to problems of
conflict and collaboration between rational self-interested actors. Developed
in the 1940s by Austrian mathematicians von Neumann and Morgenstern, it
has been applied to many problems in political science, strategic theory, and
even moral philosophy. To some extent it has been used practically by defence
planners, and has applications within economics. The essence of all game
theory applications is to analyse the interaction between strategies which
actors, intent on maximizing their welfare, are bound to take, or likely to
take, given certain levels of information.
The most crucial distinction is probably between two basic sorts of game, a
distinction that so neatly summarizes a recurrent quality of real life politics that
the terminology has entered ordinary political discourse. This is the distinction
between zero sum games and non-zero sum. Simply, one might say that a
conflict between, for example, an employer and a trade union is zero sum if
there is a fixed amount of profit that the firm can make, which cannot be
increased by co-operation between them, or, perhaps, that a conflict between
university departments for finance is zero sum if there is no chance that the
departments can do anything to increase the total university budget. The
technical quality of a zero sum game is that the gains to one player (we assume
for convenience that this is a two player game) exactly balance the loss to the
other. A non-zero sum version of these examples would allow the total amount
available for division to be increased by co-operation between the players—
profits might actually go up given good labour relations, or the university
budget might be increased by an Education Ministry impressed by altruistic
university departments, and so on. Most political situations are probably not in
fact zero sum, but most are ‘played’ by their actors as though they were.
By examining the likely choice of strategies of independent players it is often
possible to show not only what the outcome will most likely be, but where
apparently rational interest-maximizing choices, if taken by independent
actors, will produce a sub-optimal pay-off for both! This is characterized by
the most famous of the simple game analyses in game theory, the Prisoner’s