Boris Johnson Notes Trump’s Tactics to Keep EU Guessing on Brexit
A scenario is used to explain the game theory, whereby two cars are hurtling towards each other, down a narrow lane. Both vehicles have the option of pulling over, but neither driver wants to give way first. In-game theory, this scenario shows the use of models to show how rational decision-makers interact. Usually, game theory is massive in economics and in the present circumstances, which are hardly surprising since two key political issues lend themselves to game theory analysis.
The US-China trade war is one, where the two cars are heading towards each other down the country road being driven by Xin Jinping and Donald Trump. The vehicles have already ignored many of passing cars along the way, and a head-on crash is a possibility. Both drivers are aware of the risks bus none wants to lose.
Trump made getting concessions out of China a severe issue for his political base while Xi is a self-styled strongman already going through internal threats to his authority from the protests in Hong Kong. Previously, trade talks between officials from Washington and Beijing were done in Shanghai. This seemed like a hopeful sign, an indication that the leaders of the two biggest economies globally were fully aware of the ills of protectionism.
However, Trump’s way of playing the game is to make his opponents guessing. He chose that moment to announce an unexpected plan, a ten per cent tariff on $300bn of Chinese imports into the US which if implemented, meant virtually nothing China sells to the US will be exempted from the duties.
Trump says that he wants a deal with Xi; on the contrary, he wants a transaction that involves Xi getting into the passing place while he zooms past. Trump’s strategy for getting what he wants includes putting his foot on the accelerator rather than the break. The White House assumes that it is a return of the Cuban missile crisis, yet another excellent example of game theory.
Reference
seangametheory 