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Game theory explains how the British reached a result that no one prepared for

From the moment David Cameron flew to Brussels in February 2016 to secure better terms for Britain's membership in the Union, the game began. Mistakes by both sides led to a result that no one really prepared for

The young voted to stay, the adults asked to leave. Based on an illustration from the Catholic Herald website while replacing the signs
The young voted to stay, the adults asked to leave. Based on an illustration from the Catholic Herald website while replacing the signs

By Richard Fairchild, Senior Lecturer in Corporate Finance, University of Bath, The Conversation

The campaign of both parties in the UK referendum on separation from the European Union - both those who support the UK remaining in the EU and those who want to leave - can be described as surrounded by businesses. As a game theorist, there are several parallel lines. And of course from the point of disgust of both sides, it is clear that the British need to reach a productive path in relations with the Union. My research about a new type of game theory may provide insights.

From the moment David Cameron flew to Brussels in February 2016 to secure better terms for Britain's membership in the Union, the game began. Cameron, who had already promised to hold a referendum on Britain's membership in the European Union, sought to use it as a bargaining chip.

He claimed that if the other leaders in the union agreed to Britain's terms, he could convince the British public to vote to remain. If Britain did not get what it asked for, the consequence would be exit from the Union and the weakening of the Union. The referendum was designed to increase Britain's bargaining power, but the attempt failed after the other leaders called his bluff, offering limited concessions.

A real threat?

An important concept in game theory holds that it is possible to win in negotiations through credible threats. For Cameron, in order for the threat to become real and therefore also effective, it is necessary that the other leaders of the Union believe that he has such an influence on the results of the referendum that he can decide whether to stay or leave. When the referendum is at hand and the successful victory of those seeking to remain is far from certain, therefore it seems that his threat is not real.
Meanwhile, the Leave campaign seems to have used the referendum in similar ways - to secure better terms for Britain's membership of the Union. A former leader of the Conservative Party, Michael Howard, claimed that the negotiations in February failed and therefore if the British vote to leave the European Union, this will shock the European leaders and take them out of their complacency," he said.
"There is a reasonable chance that they (the Union leaders) will ask us to think again. When Ireland and Denmark voted to reject the Union's proposals, the Union offered them concessions and in a second referendum that took place it got the results it wanted.
In this situation, the supporters of leaving and the British Prime Minister used the referendum to achieve identical goals - to secure better conditions for the membership of the United Kingdom. Where they differ is that Michael Howard has continued to keep his threat alive. According to him, a vote to leave the Union will be used as a bargaining chip for the Union, which desperately needs Britain.
Despite this, we don't see any sign that the Union intends to offer or agree to additional benefits, so we are back to another concept of game theory - the game of chickens.

This is a famous game where two players move quickly towards each other on a single track. Whoever deviates from it first, loses. Of course if neither side deviates from the path, they can collide with each other and both will lose. Some have questioned whether it even makes sense for Britain to play this game against 27 opponents.

An appeal to emotion
Where traditional game theory fails in its analysis of the UK's relationship with the EU is that it is based on the idea that all human beings are rational, unemotional, self-interested people who derive the greatest value from whatever they do, regardless of others.

When moving to behavioral economics and the theory of behavioral games, which include adding variables such as psychology, emotions and social references - such as the sense of fairness, trust and empathy to the standard economic models. This economy recognizes that people may care about others and in particular work together with others to achieve a common goal.

Take for example the prisoner's dilemma - when it is clear that the strategy for everyone in the game will result in the worst outcome for both. Studies have shown that if we add empathy to the model of the prisoner's dilemma - when each player cares enough about the other, this can turn the game into one that leads to mutual cooperation, and enable a WIN-WIN situation for both players.

This is true for the UK and the EU. If both sides would develop empathy for the other side - this would result in mutual relations between all countries, a higher awareness of the other's needs, greater kindness towards the other, a softer approach in negotiations and a better view of humanity - both sides would be in a better place to achieve a mutually beneficial outcome.

to the article on The Conversation website

Translation: Avi Blizovsky

9 תגובות

  1. In any case, I am now uploading an interview with him from 2000 that was translated and published in one of the period's magazines from People and Computers.

  2. Thanks for the update, in principle, if there was a normal state of an entire system, it would also be possible to respond in real time, but the boycott means that after 20 years I'm still working alone.

  3. ט
    The British monarchy is closely related to the Russian and German "monarchy". It's not just an economic or national matter. It's mainly a political matter. For example, the Russians against the EU and the USA.

  4. The British are a smart people and they understand some things we don't:
    1. A few percent of the economic growth reaches 90% of the people while over 90% of the economic growth reaches a few percent of people always from the top deciles.
    2. An economic collapse benefits the weak and the lower middle class in several ways:
    A. House prices in London will collapse in no time, which will drag down house prices all over the UK.
    B. During an economic collapse, a reduction in social gaps is visible. You can see that after Brexit, the wealth of the 400 richest people in the world collapsed by 150 billion dollars, while the people of the middle class and the weak strata who have no free money to save or invest have nothing to lose. On the contrary, as a result their purchasing power increases in real terms as a result of the capital deletion of the upper classes and a moderate and continuous deflation (so far remember that deflation is not the enemy because economic growth is not necessarily a positive thing).
    third. The collapse of the value of the currency, in this case the pound, leads to an increase in the attractiveness of exports and the creation of new jobs for the weak and middle class. The theoretical loss of capital as a result of the devaluation of the currency is irrelevant for the lower middle class and the weaker strata because they do not have excess cash, on the other hand a job with a monthly salary is exactly what they need.
    3. Britain's renewed sovereignty over its borders and the renewed right to close them to immigrants gives a value that cannot be measured in money, and it is the preservation of its character, values, culture, social solidarity and internal security in one of the most important nations in the world, which is remembered as the one where the buds of democracy appeared with the signing of the Magna Carta, including the regime The democratic-parliamentary system of the State of Israel is based on the British model.
    4. The British citizens, like the citizens in the rest of the world, from the economic crisis of 2008 through the Israeli social protest of 2011 to the present day understand that the illusion of "fair play" was shattered a long time ago, we citizens have no control over what happens in the government institutions, not in London and certainly not in Brussels. More than that, we are not part of the game at all, no one today has the illusion that a politician, and it doesn't matter if he is conservative, Labor, Likud or Labor, works in some way for the citizens, our interests do not exist either in the corridors or in the government rooms. We are puppets in the theater who sometimes choose Likud to promote the interests of the capitalists and the various pressure groups and sometimes work to promote the exact same things. The same goes for the parties in Britain and everywhere in the world.

    So in the end, why do we need the Union? Why should British citizens be part of a mechanism designed to serve the interests of European multinationals? Isn't it enough that they should serve a similar British mechanism? At least they took half the burden off their backs. I assume that the citizens of Scotland are currently thinking the same about the British mechanism, nevertheless it should be remembered that the United Kingdom is another union within the European Union. Apparently the current strategy is to split into groups as small as possible in order to raise the impact of all the items in the group, for the sake of illustration think about a situation where 10 people have to agree on a common path compared to a million people who have to do so.

  5. I also wanted to write something about the media (Israeli and international) and how they mediate reality to us in a distorted, one-sided and shallow way, but I refrained out of the understanding that Pat Kundel is benefiting me from doing it.

    But now I found out that Alvin Toffler passed away a week and a half ago, and apart from the "Haaretz" newspaper, no website bothered to write anything about it. disgrace. A colossal disgrace.

    May his rest be in Eden.

  6. And what about the simple possibility of accepting the results of the referendum as proof that the majority of British people who bothered to come to vote simply wanted to leave the EU? And maybe these Brits, EU citizens in their own right, understand some things about the EU that we don't? And that their democratic and freedom-seeking tradition is among the most deeply rooted in the world?

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