This is the most high-stakes game of The Prisoner's Dilemma I've ever seen

[jpgray]

The prisoner's dilemma is a classic study in game theory: basically, two suspects are interrogated separately by the authorities. If the two cooperate and each refuses to betray the other, they serve six months as there is not enough evidence for serious charges. If one stays silent and the other betrays him, the betrayer gets off scot-free on a plea deal and testifies against the silent party, who gets ten years. If both betray each other, they serve five years each.

It's an interesting dilemma. If you were somehow -sure- that your conspirator was going to cooperate with you and remain silent, you could betray him and net the greatest reward. If you can't be sure, the only logical option is a betrayal, because in that way you will always avoid the worst penalty, and might get off entirely if the other party -does- cooperate with you. In an iterated (or repeated) version of the game, things often get bogged down into endless betrayal on both sides. Why? Because communication is impossible, and if you can't be sure what the other side is doing, suffering an sizable penalty equally is often preferred over risking the greatest penalty to oneself.

Here we have the entire economy at stake. Whatever you believe about the morality of bailing out Wall Street, in terms of fundamental economic health all agree some form of intervention is a necessary step. The Democrats seem to realize this, and while their plan isn't perfect, they at least are willing to cooperate to pass something tangible. Republicans however are not, at least in part. They see this as an opportunity to get off scot-free, to avoid any political penalty. They want to be seen as refusing to support -any- solution to this problem, for which no "good" answers exist.

They chose to betray. They refuse to cooperate with the Democrats. They gin up a bill that actually -increases- the pace of deregulation, and includes some mystical hand-waving about removing the fetters on investment to allow Wall St. to heal itself. This isn't going to work, and it isn't even economically sound, but that doesn't matter--it will never pass, or indeed see the floor. Because it will never pass, they are free to claim its superiority to any passed bill without any chance of being proved wrong by later events. Since no solution to this crisis is going to be a magical wish-granting genie that fixes everything wrong, those who worked to pass -any- bailout bill are thereby made vulnerable by those who refused to cooperate.

Cooperation would have distributed political damage over both parties equally, and whatever bitter pill we swallow would not be seen as a partisan solution. So we have the Prisoner's Dilemma for the Democrats, but only in a political sense--if neither party cooperates and -nothing- is passed, the economy may tank and they'll be blamed for it anyway as the party "in power." If only the Democrats try to cooperate, and pass a bill all on their lonesome with a few stray Republicans, any negative repercussions or political fallout will fall even more squarely at their door.

The insanity of this is that the GOP is risking the downfall of the entire economy for political points. They are trying to win the game, even at the cost of our financial security. It's such a reckless and irresponsible act that even some Republican pols are balking at going through with it.

(Pretty long and silly I know, but I love how well game theory explains some of these problems--feel free to make me the subject of fun. :D)

[whosinpower]

1. Yeah - but it does not matter who is blamed

Because for the average joe who lost his life savings - blaming someone will not get his savings back.
What DOES matter is how to move forward afterwards.

Call their bluff - and allow the market to do what it must do. And then be there to pick up the pieces and rebuild a better model. This bailout is a stopgap measure that costs allot with no guarentees. Financial security is an illusion whenever it is gambled on wall street. THAT is the lesson we all need to learn.

[jpgray]

2. The damage this could do, however, is extremely severe

No matter what the solution is in terms of a bailout, it's going to suck. The GOP "deregulation, heal thyself!" approach would be a total and complete disaster, and the Democratic bill is going to be tremendously unpopular with taxpayers. Further, any bill that passes is not going to fix enough problems, and what it does fix it won't fix fast enough.

If nothing gets passed? The most dire predictions from economists I respect are pretty fucking dire. If credit freezes up and housing/stock prices plummet further, we're going to see a huge disaster.

[seasat]

3. I agree but one more possible scenario.

The Democratic plan passes and the crisis is avoided. The economic downturn is not as bad as expected and Democrats are heroes. It's a long shot but if they follow up with something like a stimulus plan with relief for homeowners, it may be possible.

Maybe the Democratic party could up the stakes, too. They could include more support for the bottom 60% funded by a progressive tax like Bernie Sanders proposed. They could respond to the Repub plan for less regulation with a plan that includes more regulation. Basically as the Repubs try to work them lower, they raise the stakes to let them know they aren't going to play their game.

[jpgray]

4. This could happen, but would the bleeding stop by November?

This I think is what the GOP is banking on, so to speak. Whatever the plan is, I have a hard time seeing this improve so rapidly as that.

[FatDave]

5. I wish you would have posted this a few hours ago,

When I could have given it a Must Read.

[iceman66]

6. What really stinks

is that they were working toward a bipartisan solution until MCCAIN decided to make the bailout a political issue.

Just one more example of how the bastard consistently puts his own ambition over what's good for the country.

[jpgray]

12. There were rumblings before the WH meeting, but yes McCain may have coordinated this

It's a truly shocking example of political gambling--I don't know that I've seen anything quite like it.

[Cessna Invesco Palin]

7. I say we call their bluff and bring their stupid fucking bill to the floor now.

That'd be interesting, wouldn't it?

[jpgray]

10. Pat Buchanan is already saying that if nothing passes it's the Democrats' fault

But that's another huge risky move, bringing their bill to the floor. From what I understand, this bill isn't well thought-out or very specific, and given that this debate began almost last week, the timing is revealing. But I'm not sure where we go from here--deadlock? Adding deregulation clauses to placate the GOP? The real heart of this problem in a craven strategic sense is that neither party wants to be seen as "responsible" for what is inevitably going to be a joyless solution, and the Republicans have a retreat position to "hey we're not in power!" while they argue the Democrats do not.

[depakid]

8. Interesting: game theory analysis- iterative n player PD

This is one reason why many here have looked on aghast over the past 8- no 15 years of enabling and legitimizing far right policies, when what Democrats ought obviously to be doing was following "tit for tat" strategies.

See: http://en.wikipedia.org/wiki/Anatol_Rapoport

http://www.allacademic.com//meta/p_mla_apa_research_citation/2/7/8/2/1/pages278212/p278212-1.php

[jpgray]

9. I'm glad you posted some links--PD has provided real, fascinating insights into biology

The beauty of tit for tat is its simplicity. It's also interesting that one of the "naughty" programs going into the contest (as opposed to the "nice" tit for tat) was named "Friedman"--I've always wondered if that was named after Milton. :D

Another fascinating problem of the iterative game is that you need a certain population of "nice" strategies if tit for tat is to succeed--too few, and any "nice" strategy falls behind the nastier ones.

[depakid]

20. Cool, eh?

[Mayberry Machiavelli]

11. k/r. Excellent analysis, apt analogy. Outstanding thread.

[Alcibiades]

13. PD's are solvable

For example, if you have a game with repeat play, a strong central agent can act as an enforcer. If, for example, you have a mob boss who kills all rats, then the entire criminal organization will reap the benefits of a lower rate of defection, because the penalty for defection far exceeds the benefit. That's similar to the Republican solution. The Republican Party strongly punishes any office holder who defects, much more so than the Democrats.

Anyway, I think you have the wrong game. Prisoner's Dilemmas are the most well-known game in game theory, but they are overused. This isn't a PD: it's a game of chicken.

[jpgray]

17. I think you've got that wrong, on a number of levels

Absent team play or communication between the players, there's no enforcing agency possible. This is why all the more "advanced" strategies couldn't outperform tit for tat.

And it's not like chicken much at all, because there is no way to dominate your opponent completely--the only way to deny your opponent the most points in chicken is by causing a crash, which destroys you as well. The only way to deny your opponent any points in PD, by contrast, is by betraying him when he cooperates. That's the major difference which makes chicken less applicable. PD allows you to apply the maximum penalty whilst receiving the maximum benefit--chicken doesn't allow that.

edit: I'll admit either metaphor isn't a very exact fit, though.

[grantcart]

14. interesting thread good analogy -- Here is my analogy for the last 8 years

Clown car for an 8 year circus.

Every time you think there cannot be another clown - out pops some new clown.

This week meet Paulson.

[jpgray]

23. I think your analogy is actually less of a stretch

:patriot:

[Median Democrat]

15. Gme theory becomes complex from the perspective of each individual GOP member. No downside.

The individual GOP member whose home district is heavily anti-government has nothing to lose by trying to tank any agreement. The fact of the matter is that economic growth is going to be slow at best, or a depression at worst. Thus, from the point of view of the individual GOP member, their best course of action is to piss all over any deal that comes out, and blame everyone. Likewise, if no deal comes out, then you can blame everyone for not embracing your briliiant deregulation idea.

Back at home, just make an appearance on the local Fox affiliate, and sing the Reagan mantra of Goverment can't solve the problem, it is the problem, and cruise to an easy re-election. There is no upside to the indvidiual Republican of supporting any deal, and a Great Depression is a win.

[jpgray]

19. Exactly

People are already predisposed to believe this anyway--"waste of taxpayer money," "gov't is the problem," etc. You point out exactly why it's going to be so interesting to see who betrays and who cooperates among the GOP.

[Marsala]

16. Prisoner's Dilemma requires no communication. This is high-stakes Chicken.

The Democrats and Republicans are driving at each other at full speed with Paulson on the sidelines screaming that they're out of their minds.

[jpgray]

18. But with chicken, you can't freeze out your opponent without a crash

A crash will destroy you as well. In PD, you can freeze out your opponent by betraying, so long as he cooperates. There's no way to provide the maximum penalty to your foe in chicken whilst coming out vastly ahead yourself--that's not the case in PD. But I'll admit the metaphor in either case is a bit of a stretch. :)

[Kurt_and_Hunter]

21. But there is a 'mad bomber' element here. It's really Solomon, though.

As with Chicken, there is a high value to being known to be irrational, a reputation the pugs have earned. They're the 'mad bomber' party, which is effective in many types of negotiations.

Mostly, though, I think this is Solomon and the baby.

The game is asymetrical. The Dems can only win politically, but the country can lose. So it's like a PD game with skewed pay-outs.... like $837.34 versus the little finger on your left hand. It transcends math unless the two pay-outs have an exchange rate.

The Republicans have a very weak game theory hand in that they can only gain if the Dems 'win.' If Republicans block this the market tanks short-term, regardless of whether it's a good plan long term. So defecting is fatal if the bill loses. If the Dems just announced a vote the pugs wouldn't know if it was safe to defect. So the bill either passes or the Republicans are destroyed, with there being an election so soon.

But the Dems won't play that game because they care about the people to some degree. They are not willing to have the bill fail even if it means destruction for the pugs.

Caring about America has always been our Achilles heel.

[jpgray]

22. Spot on--you see this dynamic on many controversial issues

For example, the GOP has a nasty habit of elevating moral wedge issues they don't really care about to the forefront of the debate. Take gay marriage--the GOP markets the issue and promotes it because they've already staked out the popular territory. The Democrats are forced to either abandon their values or take the unpopular stance, and as a result usually some mushy middle position is taken. Because the GOP are using the issue solely for electoral gain, it doesn't really matter for them what happens in terms of legislation or execution--they just need to be on the popular side. Since we have ideals on those issues (or demographics that have them, anyway), we lose a little no matter what we decide.

[Chasing Dreams]

24. There is a way out for the Democrats.

They bring the Paulson-Dodd-Frank plan to the House floor, and have say 55 to 60% of Democrats in favor. The leadership can say they did their job. Now it is up to the Republicans to get enough of their Caucus to vote in favor. Of course, they won't. But the radical conservatives will be blamed for the defeat. No way it can be pinned on us if we have 60% in favor.

The markets will tank. Pelosi keeps the House in session, day after day, scheduling vote after vote on the same bill. The Republicans can keep voting no or cave in. Yes, it is a game of chicken, but in the end the House Republicans will be blamed for delay or destruction.

[jpgray]

28. I think that would work. Do they have the political will to stay consistent?

[Chasing Dreams]

29. Doubtful. I do not believe they have the will to even try it.

[Lilith Velkor]

25. It's not really a dilemma if you know the other guy will betray you.

Then again, I'm not that familiar with the game.

Thanks for a thoughtful thread.

[cemaphonic]

26. The dilemma aspect is this:

(and mind, I'm only talking about the game theory concept, not the bailout bill)

The biggest net benefit to the criminals is to stay silent - they end up serving 6 months each, for a total of 1 year. In the canonically correct 'solution' (both parties squeal, for the reasons outlined in the OP), each one is going to serve for 5 years, for a total of 10 years. So from both the standpoint of the whole system, and from each individual prisoner, they are getting a *much worse* deal than they would if they kept faith with each other.

So the dilemma is that by each individual following the optimal strategy for himself, both are harmed more than they would be if both followed the non-optimal strategy.

[Guaranteed]

27. My biological trophic levels analogy is better.

:P