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Authored by Dr. Roger B. Myerson. | November 2007
In a dangerous world, we need to think very carefully about how military force is used. Game theory can serve us in such analyses by providing a framework for probing the inextricable connections between our adversaries? decision problems and our own. To illustrate the power of game theory, the author focuses on a vital question that confronts American policymakers today: What determines why an application of military force, which was intended to deter potential adversaries, sometimes instead stimulates them to more militant reactions against us? When we feel that force is necessary, what can we do to minimize the risk of such adverse reactions?
A successful deterrent strategy is key and requires a balance between resolve and restraint, and this balance must be recognized and understood by our adversaries. So for our forceful actions to have their intended deterrent effect, they should be framed by a process of communication with our potential adversaries that establishes mutually recognized limits and rules about what we will and will not do.
From early roots in the work of John von Neumann and John Nash, game theory developed as a general framework for analyzing systems of incentives that involve two or more rational actors. Applications of game theory have extended beyond the traditional scope of economics to include the design of auctions, incentives in organizations, analysis of political institutions, and problems of international relations. In game-theoretic analysis of international relations, the great seminal classic is Thomas Schelling?s Strategy of Conflict (Harvard University Press, 1960). In particular, the vital importance of our strategic coordination with our adversaries, as well as with our friends, was shown by Schelling and is a fundamental point of this paper. Indeed, all arguments herein may be viewed as straightforward applications or extensions of Schelling?s ideas.