Forum Post: Politics: A Game Theory Approach

Game theory is a model used to predict or explain the actions of individuals or groups in a game or other contest where the actions of the other players determine the optimal response by any given player. Game theory has numerous applications. One such application is in the political arena. Application of game theory to the debt crisis and the jobs debate actually shows some sinister if not criminal intentions of the House Republicans. So the game in question is who gets the White house in 2012 and who controls the Congress. First a economics lesson. Modern Economic thought posits that in a recession people spend less both out of necessity and anticipation. Some spend less because they have lost their jobs or their income has fallen and others because they anticipate that this may happen to them so they too spend less in order to save money for such an occurrence. This decrease in consumer spending causes producers to produce less so as to not exceed demand. If the recession lingers too long the inevitable result is more layoffs and a further decrease in consumer spending. This downward spiral is known as the multiplier effect. To “smooth” out the business cycle government must spend to keep the economy going. Some of the spending is automatic because it is built into the system things like unemployment and food stamps, these programs keep consumer spending from dropping too far too fast. Other things require a response from the government things like new infrastructure, research and development, tax credits and other forms of fiscal policy. But in the Game theory scenario a player in the game or contest will sometimes act in a way to undermine the good of all players because one player benefits more from cooperation or is perceived to benefit more than other players. This is exactly what the Republicans are doing now. Some may argue that they don’t like to spend the taxpayers money but they didn’t care to spend both our money and our lives fighting in “conflicts” abroad, they didn’t care to spend our money when they were giving their selves and other wealthy Americans tax breaks and they didn’t care to spend it on Medicare part D. So really what they mean is they don’t like for democrats to spend taxpayer money. Anyway back to game theory… so even if it is in the best interest of America to create jobs through fiscal or monetary policy, the Republicans will continue to be the party of No so that when election time roles around they can point to the President and the Democratic senate and say “they did nothing to fix America’s economy” when all along they ensured that nothing got done. They will blame everything on the Democrats even though Bush came into office with a surplus and left with a ten trillion dollar debt.