Strategy Basics I: Rational Decisions

How should we think about the study of politics?• Politics involves constant decision-making• Examples

• What education, traffic, economic policies to implement?

• What countries should be trade partners?• What should be a tariff rate with a trade partner?

• What countries should be allies?

Many political decisions are interactive• What is the difference between an interactive and non-interactive decision?

• Example• Following a map• Purchasing ice cream• Choosing a career• Firm setting price• Punishing children

Interactive decisions in politics?

• Hiring bureaucrat to enforce building codes

vs.

• Supporting allies• Can we conclude that alliances aren’t useful?

Strategic Decisions

• Interactive decisions are called “strategic” • Why is understanding strategic decisions important?

Hot hand example• Why is a player sometimes hot and sometimes cold?

• Naïve view might conclude that players are “streaky”

• Sophisticated view might conclude that shooting percentages depend on the strategy of the opponents defense, which depends on the strategy of shooter

Strategy and International Politics•国际关系•关系 implies interaction• Most decisions are interactive• Examples

• Trade交易• Investment 投资• Alliances 联盟 lianmeng• Treaties 条约 tiaoyue• Sanctions 制裁 zhicai• War 战争

How should we study these decisions in political science?

• Goal of political science?• Description -- What?

• Empirical regularities• Explanation & Analysis -- Why?

• Prediction

• Theory answers “Why” question• Normative vs. positive• Inductive vs. deductive reasoning• Holistic vs. methodological individualism

Theories of Strategic Decision-making• Theory of choice

• Positive, deductive, and meth. Individualistic

• Choice implies . . . • Alternatives• Actions• Outcomes• Goals (Preferences)• Constraints• Beliefs

Building blocks of theory

• Individuals have wants and beliefs, and they maximize.

• Wants (preferences)• Where do they come from?• Do they change?

• Beliefs (Uncertainty)• Where do they come from?• Do they change?

• Maximize (Instrumental actions)

Properties of Preferences

• Completeness: Preferences are complete if, for any two possible alternatives x and y, either x>y, x<y, or x=y.

• Transitivity: A preference relation is said to be transitive if, for any three possible alternatives x, y, and z, if x>y, y>z, then x>z.

Maximizing

• Actions lead directly to alternatives• Expected utility

• The Voice – expected utility decision to hit button on hearing a voice

• Conflict initiation

Study of strategic decisions is called Game TheoryStrategic Game elements•Players•Actions•Outcomes•Preferences•Beliefs•Constraints

Let’s discuss each . . .

Number of players affects outcomes

• Poker• Prisoner’s Dilemma

Move sequence

• Bargaining (Battle of the sexes)• Agenda setting• Sailing

Players hold preferences over outcomes• 走为上 -- "Of the Thirty-Six Stratagems, fleeing is best”• When your side is losing, there are only three choices

remaining: surrender, compromise, or escape. Surrender is complete defeat, compromise is half defeat, but escape is not defeat. As long as you are not defeated, you still have a chance.

Beliefs and Perceptions

• Empty City Strategem (Zhuge Liang’s Campaign against Sima Yi in The Romance of the Three Kingdoms 三国演义 )

Constraints• 围魏救赵 , Wéi Wèi jiù Zhào• When the enemy is too strong to be attacked directly,

then attack something he holds dear. Know that he cannot be superior in all things. Somewhere there is a gap in the armour, a weakness that can be attacked instead. The idea here is to avoid a head on battle with a strong enemy, and instead strike at his weakness elsewhere. This will force the strong enemy to retreat in order to support his weakness. Battling against the now tired and low-morale enemy will give a much higher chance of success.