Friday, May 9, 2008

Econ 101: Game Theory and Politics

A decent description of modern economics is the study of behaviour in the face of incentives. Game theory is a branch of economics where we study behavior in strategic settings. In this, and in many other areas, economists have confirmed that understanding incentives goes long way toward explaining behavior.

And here is the thing with games: the rules of the game create the incentives. So once we know the game's rules, we internalize these rules, devise strategies that serve to maximize likely outcomes given these rules, and then play the game based on these strategies. At the risk of picking on one candidate too much, it is quite infuriating for someone like Hillary Clinton to say (and I paraphrase): "if the Democratic primaries were run under the same rules as the Republican primaries, I would have already won the nomination."

Oh please, if the rules had been different at the outset, Obama would have had another set of strategies and Hillary would have probably lost then too. We all understand this whether I dress it up as economics or not. What is sad it that she would even use this argument - to whom does she think this appeals? The micro-trending population of poor losers?

This is also true of statements like "well, I won the big states." Yes, but the democratic primary is not the general election - the game is entirely different. It is a false analogy.

Games are defined by their rules - different rules, different game. End of story.


jessibeaucoup said...

The micro-trending population of poor losers?


Jeff Alworth said...

The Clinton campaign is running a seperate, but related, analysis: that if Hillary had tumbled to the dynamics of the race earlier, her Archie Bunker campaign would have put her over the top. It is refuted nicely here, and I'll quote a key paragraph:

Clinton couldn't have run as this candidate at the beginning of the cycle. John Edwards occupied that space, with biographical authenticity, through January. February was a month dominated by coastal elites -- New York City, Boston, Los Angeles -- and African-Americans. Clinton could plausibly have done even worse if she'd run around talking about abandoning Nafta and protecting gun rights.

Lots of "what ifs" getting floated now, but they're mainly butt-covering exercises from a dying campaign.