Dilemma. One assumes that two prisoners are held in separate cells, accused of
a crime they committed together. To each is made the offer of turning state’s
evidence against the other, or remaining silent. If a prisoner gives evidence
against the other, implicating themself, they will receive a minor prison
sentence; if they stay silent, but are convicted on their partner’s evidence,
they will get a major sentence. But if both remain silent, there being no other
evidence, they will both be acquitted. What do they choose? Social psychology
experiments have given empirical confirmation of the theoretical prediction
that they will both confess, rather than trust the other to co-operate and
remain silent. Thus a sub-optimal result arrives, in the absence of malice, out of
rational calculation.
One point about the prisoner’s dilemma game, and it has many real political
applications, is that the results depend crucially on the surrounding context,
which changes the effective pay-off matrix. Suppose, for example, that both
the accused are members of a criminal gang which ruthlessly punishes
informers, once they are let out of prison. In this context the prediction
changes. The more complicated the game, and to model any important
political situation obviously requires vastly more complicated games, the more
unexpected become the predictions, but also the more uncertain. One general
result is to show how little our major political actions depend ultimately on
rational choice, or how limited is the possibility of rationality, even on major
issues, given likely information levels.
Game theory is one branch of a whole development ofpublic choice
theoriesthat are said to shed increasing light on social interaction, and they
occupy a curious half-way house between beingmoral philosophyand
purely neutral predictive theory. However, the great promise they once
showed has not been realized, largely because of the difficulty of building
sufficiently accurate empirical assumptions into the models. Where they do
work, for example in predicting coalition formation in multi-party govern-
ments, the results are often intuitively obvious in any case. It is not so much that
game theory does not adequately model rational strategy but that institutional
restraints force actors to behave, at best, with what has come to be known as
‘bounded rationality’.
GATT
The General Agreement on Tariffs and Trade (GATT), which was signed at
Geneva in 1947 and operated as aUnited Nationsspecialized agency, was part
of a series of attempts to reform the international economy after the Second
World War, starting with the Bretton Woods agreement of 1944. The main
aim of GATT was progressively to reduce tariffs in all signatory countries
towards an ultimate state of world-widefree trade. A series of ‘rounds’ of
GATT