Saturday, August 23, 2008

Nash Equilibria in geopolitics

From principle 6, most geopolitical issues should be analysed via game theory, since there are few enough units to contend with and most issues can be modelled via various strategic games. Whereas most game theory proponents have strict guidelines to test whether Nash equilibrium is possible, marconomics starts with geopolitical situations which have been at a stalemate for an extended period of time, and surmises that it can only be due to Nash Equilibria. If any player was using sub-optimal strategies, they would have "lost" by now. Equally, if the situation was out of equilibrium the stalemate would break until it found a new equilibrium down the track.

As an example, I have modelled the Israel-Palestine Conflict to give an idea as to why it is so intractable in the long run.

The Cold War is another clear-cut case of a Nash Equilibrium. I would argue that the stalemate broke down only because finances eventually disabled Russia from following its optimal strategies. The New World Order (NWO) since the fall of the Berlin Wall and the breakup of the USSR, has been demonstrably not in equilibrium. Due to the fact that "the rules" (which in the case of the cold war is the structure of the UN) have remained unchanged a new equilibrium (which invokes the threat of Mutually Assured Destruction as the only ultimate check on misbehaviour of one or another of the veto wielding members) is entirely possible. Thus as an example, if Russia threatens Poland with nuclear strike, the main deterrent is the possibility of a disproportionate response by the US, etc.

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