Inside Story: Is it time for Condi to start playing games?

Can design mechanism theory apply to politics - say to help Rice set parameters of negotiation?

By
October 16, 2007 23:38
Inside Story: Is it time for Condi to start playing games?

rice 298.88. (photo credit: AP [file])

 
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Maybe Condoleezza Rice should stop wasting her time, running back and forth between Jerusalem and Ramallah, twisting the vise on Ehud Olmert and Mahmoud Abbas, making nice to Avigdor Lieberman and Eli Yishai, and hanging and dishing with Tzipi Livni. All that effort will have been for naught if the Israelis and Palestinians get to Annapolis and do little more than pose for the cameras and talk past each other at the negotiating table. If the US secretary of state really wants to accomplish something at next month's meeting, she might try to force the participants to try a bit of game playing. For example, there's the pie-game, where one player has to split an amount or item with the other - in this case, let's say all the land between the Mediterranean Sea and the Jordan River. Rice can set rules that one player, say Israel, gets to divide the pie - er, territory in half, and the other player, the Palestinians, gets to choose which half they will keep. That motivates the first player to make the division as equal as possible so the second player won't have any advantage in the choice. Or Rice might want to force Olmert and Abbas to play the "ultimatum game," where one player gets to offer the other player a take it or leave deal, and if the second player refuses, both sides walk way with nothing (which actually sounds like a lot of Israeli-Palestinian negotiations). All these theoretical situations are related to game theory, the field of mathematics/economics for which three American Jewish academics - Leonid Hurwicz, Eric Maskin and Roger Myerson - were awarded the Nobel Prize for Economics on Monday. The trio was specifically cited for their work in "design mechanism theory." Broadly speaking, this is the art of setting up the rules of a game to achieve a desired outcome. The "game," in practical economic terms, can be an auction, a government tender, the awarding of stock options, the allocations of resources - or negotiations between parties. The more common example for the latter application is when governments have to intervene in strikes and mediate between management and labor; design mechanism can help devise rules of bargaining to best ensure a fair compromise between the sides. But can design mechanism theory have a practical use in the political sphere - say to help Rice set the parameters of negotiation between Israel and the Palestinians? It certainly helps when the mediating party already pretty knows much the outlines of the outcome it wants to see between the two sides. So perhaps instead of shuttling between Jerusalem and Ramallah, Secretary Rice should be studying up on her game theory. The obvious man to ask is Hebrew University Prof. Robert Aumann, who two years ago also won the Nobel Prize in Economics for doing pioneering work in this field. Aumann, not surprisingly, knows both the work and winners of this year's Nobel quite well. All three men have personal connections to Israel, especially Maskin, who is one of the organizers of the Hebrew University's summer school for economic theory, and is scheduled to teach in Jerusalem in June. Aumann lavishes effusive praise on the men and their work. "Mechanism design is a tremendously useful tool in economics," he says, "a form of game engineering designed to get people to act in certain ways, in their own self-interest, but still toward a beneficial outcome. "You might say the granddaddy of mechanism design was King Solomon, in the story of the two women who both claimed to be the mother of the same child. One aspect of mechanism design is to set up the game so that the players have to reveal their true intentions, and that's what Solomon did, giving incentives to the players to divulge private information." It is easy to see the value of that in business bargaining. But what about diplomatic negotiations - especially our own? Aumann has in fact spoken about the value of applying some aspects of game theory to the Israeli-Arab conflict. But when it comes to mechanism design, he gives an emphatic no. "For it to work, you need a very clearly defined set of rules by which the players stick to," he notes. "That doesn't work in the Middle East. Do they play by the rules in Iraq? Does Iran play by any rules? "The situation with us is not so well defined - there are no fixed signs. In mechanism theory you set rules and let the players play - but you won't see such sharply defined rules in Annapolis. Game theory teaches us as much what not to do, as what to do, and we've already made so many mistakes and caused so much irreparable damage by doing the wrong thing." Aumann's pessimism about the current course of the peace process is well-known. But his colleague at HU's Center for the Study of Rationality, Prof. Sergiu Hart, agrees that mechanism design probably can't be put in play here. "You need very determined values to utilize it - the object of the game has to be a very determined object or value, like a sum of money, which is why it's primarily an economic tool," says Hart. "It might have some political application, but some of the issues that Israel and the Palestinians are negotiating about are too fuzzy for it to be applied." So mechanism design theory may not provide any help for Rice as she tries to goad Israel and the Palestinians to an endgame. But that doesn't necessarily mean that the secretary should stop playing games altogether. "Stockholm '07 may not be applicable to the Middle East," says Aumann, "but Stockholm '05 is." He's referring of course to his own Nobel-prize winning work on game theory. One of Aumann's most significant contributions was his research on "repeated games," in which players encounter the same situations over and over again. As she returns back to Jerusalem and Ramallah this week, that's certainly one aspect of game theory that Rice will have no trouble relating to. Calev@jpost.com•

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