Weeks 5 and 6

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WEEK 5

Up until now, I was still having a great deal of difficulty finding a topic that I could apply game theory to that another student/researcher had not covered before. Almost every international relations issue that I found interesting enough had at least one paper written on the subject. Also, since I am a novice in game theory, there was really nothing I could do to build upon this existing research.

But, while I was reading BDM's book, he argues that only four questions need to be answered in order to make a forecast using game theory. They are as follows:

1. Identify every person or group with an interest in trying to influence the outcome, but that does not necessarily mean only the key decision-makers.
2. Estimate as accurately as possible what policy each player would like to see prevail, in other words, what do they want?
3. Determine how important the issue is for each player/group involved. Is it so important that the player/group will focus solely on this situation in order to achieve a specific outcome or do they have other pressing matters that preclude them from participating as much as they'd like?
4. Determine how influential each player/group is relative to the other players involved. How persuasive is each player?

When I read that excerpt, only one subject occurred to me: U.S. domestic politics. Specifically, I thought that I apply game theory to financial reform legislation that was being debated at the time. This worked for two reasons; I could BDM's four questions relatively simply and there would not likely be any existing research on this particular topic. Here are the players I believed would have a meaningful interest in influencing the outcome (there are definitely more than just the group I picked, but the list would have grown quite large if I identified every person interested in the outcome. President Obama, Speaker of the House Nancy Pelosi, House Minority Leader John Boehner, Senate Majority Leader Reid, Senate Minority Leader Mitch McConnell, House Financial Services Committee Chairman Barney Frank, House Financial Services Committee Ranking Republican Spencer Bachus, Senate Financial Services Committee Chairman Christopher Dodd, Senate Financial Services Committee Ranking Republican Richard Shelby, and Republican Senator Bob Corker. I was not able to answer the other three questions during Week 5, so I decided to pose the question to the class during Week 6.

WEEK 6

Following the classroom discussion on Tuesday, I decided to reorganize the important players of the financial reform debate into groups. With this new organization, although there are differences in the specific policy positions of each individual player, each group is organized by the broad position that each of the players within the group advocate. Therefore, for simplicity’s sake, I organized the individual players into one group that advocates strong financial reform and another group that opposes strong financial reform (although they are not opposed to some kind of reform). The first group advocating strong reform includes President Obama, House Speaker Pelosi, Senate Majority Leader Reid, House Financial Services Committee Chairman Frank, Senate Financial Services Committee Dodd, White House Chief of Staff Rahm Emanuel, and White House advisers David Axelrod and Valerie Jarrett. The second group opposing strong reform includes House Minority Leader Boehner, Senate Minority Leader McConnell, House Financial Services Ranking Republican Bachus, Senate Financial Services Ranking Republican Grassley, and banking lobbyists. I am still researching who the most powerful lobbyists are; although the entire banking industry would likely be affected by the legislation, it would be impractical to list the “banking industry” writ large as a player in this game. In addition to continued work on the model, I visited the website www.gametheory.net and found it to be a very helpful tool. The site is aimed at a variety of people from students and researchers to business people trying to apply game theory to some situation their firms are facing. I downloaded several lecture notes from introductory courses to game theory. Specifically, Massachusetts Institute of Technology and University of Pittsburgh lecturers provided very accessible information that even casual students of game theory may understand. Since these are introductory course notes, robust mathematical models of game theory were not included.

Finally, Professor Wheaton suggested that we all start to think about how we wanted to publish the results of our individual studies. Obviously, I'm writing a blog now, but at the time I was considering building a Google Site since I had experience using it for my Competitive Intelligence class during the winter term.

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