Game Theory is useful but I am mostly not convinced here. The prisoner's dilemma is a symmetric game. It leads to the conclusion that both sides defect from the cooperative outcome in the one shot game. The game the US is playing with say, Israel, is not a symmetric game. The US is a big player and Israel is small. When the game is modified in this way, the small player still wants to defect but the big player absorbs the defection and plays the cooperative play. The US should be the free trader in this modified Prisoner's dilemma game.. I think Chicken does a better job of describing our world today. And if Chicken is modified a bit so that swerving brings psychological pain, we can get to outcomes where both counties run into each other and die in a Foot Loose game of chicken.. This is like the US and China escalating tariff scenario.
One last point. It's probably best to describe the pause in terms of the stock and bond market crash. That gives a different read then the two you propose.
Perhaps. Rationality only means you have goals and do your best to achieve them. One might say Trump wants to see other national leaders grovel before him and is doing his best to make sure that happens.
Game Theory is useful but I am mostly not convinced here. The prisoner's dilemma is a symmetric game. It leads to the conclusion that both sides defect from the cooperative outcome in the one shot game. The game the US is playing with say, Israel, is not a symmetric game. The US is a big player and Israel is small. When the game is modified in this way, the small player still wants to defect but the big player absorbs the defection and plays the cooperative play. The US should be the free trader in this modified Prisoner's dilemma game.. I think Chicken does a better job of describing our world today. And if Chicken is modified a bit so that swerving brings psychological pain, we can get to outcomes where both counties run into each other and die in a Foot Loose game of chicken.. This is like the US and China escalating tariff scenario.
One last point. It's probably best to describe the pause in terms of the stock and bond market crash. That gives a different read then the two you propose.
Thank you for sharing. Game Theory assumes that economic agents are rational about their choices. Is that assumption too strong here?
Perhaps. Rationality only means you have goals and do your best to achieve them. One might say Trump wants to see other national leaders grovel before him and is doing his best to make sure that happens.
I think the true winners are the neighbors who formalized a trade agreement in order to move away from a volatile partner.