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David Bearce

Sarah Gavison (104 and 110). Ben Montoya (106). Doug Snyder (102 and 107). Jia Chen (101 and 105). Kim Lee Tuxhorn (109 and 111). Leslie Ochreiter (103 and 108). David Bearce. Please sit in the same general section of Math 100 as your Teaching Assistant. Hallway entry.

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David Bearce

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  1. Sarah Gavison (104 and 110) Ben Montoya (106) Doug Snyder (102 and 107) Jia Chen (101 and 105) Kim Lee Tuxhorn (109 and 111) Leslie Ochreiter (103 and 108) David Bearce Please sit in the same general section of Math 100 as your Teaching Assistant Hallway entry Hallway entry chalkboards

  2. Outline for 9/5: Game Theory in International Affairs • What is a game? • The Prisoner’s Dilemma (pp. 76-79 in G&P) • US/USSR arms race during the Cold War • A trade war between the US and China? • Lack of international environmental cooperation • Chicken and the Cuban Missile Crisis

  3. Game Theory • Mathematic method for analyzing strategic interactions • A game has 3 parts: • At least 2 players with • 2. At least 2 strategy options for each, which • 3. Identify a set of strategic outcomes. • A 2 player game with 2 strategy options for each player yields 4 possible strategic outcomes, which can be described in a 2 x 2 table.

  4. The Prisoner’s Dilemma 2 Players 1st prisoner 2nd prisoner 2 Strategy Options C- Cooperate with other prisoner (or not talk to the police) D- Defect on other prisoner (or talk to the police) 4 Possible Outcomes CC - both prisoners cooperate with each other (refusing to talk) CD - 1st prisoner shuts up, but 2nd talks with police DC – 2nd prisoner shuts up, but 1st talks with police DD – both prisoners defect on each other and spill their guts How do we rank these outcomes from the perspective of being a prisoner? What is the best possible individual outcome? What is the worst possible individual outcome? 2nd C D C 1st D

  5. Completing and Solving the PD Game Assign each outcome a number based on it’s preferred ranking to each player 4=most preferred and 1=least preferred If DC > CC > DD > CD, then we have the following game: 4 3 2 1 2nd C D C 1st D Which outcome would be the best for both players? Which outcome is the most likely to emerge from this game ? Solution Concepts: Dominant Strategies and Nash equilibrium

  6. Why did the US and the USSR engage in a costly and dangerous arms race? 2 Players 1 - USA 2 - USSR 2 Strategy Options C- Cooperate = don’t increase armaments D- Defect = increase armaments 4 Possible Outcomes CC – Both USA and USSR stop arming, no arms race CD - USA stops, but USSR increases arms DC – USA arms, while USSR disarms DD – Both USA and USSR arm, costly arms race From the perspective of realism, what would be the worst outcome for each player? What would be the best outcome?

  7. From the realist perspective of the USA: Worst outcome would be to disarm, while the USSR arms (major power disadvantage) CD = 1 Best outcome would be to arm, while USSR disarms (gain power advantage) DC = 4 Next best outcome would be mutual disarmament (no power advantage, but no money wasted) CC = 3 Next worst outcome would be mutual armament (no power advantage, lots of money wasted) DD = 2 Same logic from the perspective of the USSR C USSR D C USA D

  8. Why might there be a trade war between the USA and China (PRC)? 2 Players 1 - USA 2 - PRC 2 Strategy Options C- Cooperate = open the domestic market D- Defect = close the domestic market 4 Possible Outcomes CC – Both USA and PRC open their markets, free trade!! CD - USA opens its market, while PRC closes DC – USA closes its market, while PRC opens DD – both USA and PRC close From the perspective of mercantilism, what would be the best outcome? What would be the worst outcome?

  9. From the mercantilist perspective of the USA: Worst outcome would be to open its market, while the PRC remains closed (trade deficit) CD = 1 Best outcome would be close, while PRC opens its market (move towards trade surplus) DC = 4 Next best outcome would be mutual trade openness (may be no trade advantage, but at least consumer prices would be low) CC = 3 Next worst outcome would be mutual trade closure (no trade advantage with higher consumer prices, i.e. inflation) DD = 2 Same logic from the perspective of the PRC Where are we currently in this game? C PRC D C USA D

  10. Why is it so hard to get other countries to cooperate in terms of the environment? 2 Players 1 – My country 2 – Rest of the World 2 Strategy Options C- Cooperate = protect the environment, which entails significant adjustment costs D- Defect = ignore the environment to avoid paying any adjustment costs 4 Possible Outcomes CC – environment completely protected with significant adjustment costs CD - pay adjustment costs, but get incomplete environment protection DC – get some environmental protection without paying any costs DD – environment ruined, but no adjustment costs

  11. Prisoner’s Dilemma is not the only game in International Affairs Chicken OG Swerve Straight Swerve Fonz Straight Cuban Missile Crisis USSR Back down Escalate Back down USA Escalate

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