all the time. Although applied game theorists often like to ignore these complicated “mixed strategy” approaches to problems, they do so at their own peril. Rolling the dice can really make a difference in how things turn out.
Examples of such gambling are all around us, and some great movies roll the dice very cleverly to create climactic moments. Who can forget in
There it is: “Men are likely to forget in the heat of action where their best interests lie and let their emotions carry them away.” How beautifully put. He’s just explained that Joel Cairo will try to be careful not to kill Spade, but then, Cairo can get emotional, so there is also a chance that if Spade doesn’t talk he’ll end up dead. In this brief exchange we see three lovely principles of game theory at work: the question of credible commitment; the use of playing probabilistically to alter how others look at the situation; and the pretense of irrationality (the heat of the moment) for strategic advantage. What could be truer to life’s fears and calculations? How many of us would dare to stay silent given Sam Spade’s gamble: keep the bird and maybe die, or give up the falcon and (maybe) live?
With a bit of luck, it will become apparent that game theory is not limited to parlor tricks, movie scripts, and brainteasers. It is a powerful tool for reshaping the world. In the remaining chapters, we will use these foundations to see just what kind of problems rational choice theory can tackle, and how math, science, and technology now allow us to predict and engineer particular outcomes that we might otherwise assume would only be determined by a random mix of good or bad fortune and a heavy dose of human whim.
4
BOMBS AWAY
WE NOW UNDERSTAND the basic principles of game theory. That’s all well and good, but how do we use these principles to solve the big problems of our time? Well, let’s not mess around—let’s take a look at North Korean disarmament.
Being born in North Korea pretty much ensures having a miserable life. The average North Korean has to work an entire year to earn what an average American, Irish, or Norwegian worker makes in around four days. Money isn’t everything, but it is a pretty good first-cut approximation of quality of life.
Of course, being born in North Korea is not always bad news for everyone. Kim Jong Il, that country’s “Dear Leader,” seems to do very well indeed. He is estimated to be worth around $4 billion. That’s about one-third of North Korea’s annual gross domestic product. (Poor Bill Gates, his wealth is only about 0.4 percent of the U.S. gross domestic product.)
Kim’s wealth, womanizing, heavy drinking, and gourmand tastes incline many to think of him as an inconsequential, even frivolous, lightweight dictator. He is frequently described as irrational, erratic, and dangerous. Most assuredly he is the last of those, but irrational and lightweight—I think not. Sure, he came by his position the old-fashioned way—he inherited it (on the death of his father, the “Great Leader,” Kim Il Sung). Still, that was a long time ago. No fool stays in power for years on end when there are so many generals, sons, and wives waiting in the wings to launch a coup.
Kim Jong Il is a savvy, skillful, vicious demagogue. If he is erratic it is because it serves his interests. While we might be inclined to laugh at this seemingly odd little New Age dictator, he cleverly maneuvers within the limitations of the miserable cards he’s been dealt to make himself a menace on the world stage. All the while that he engages in fomenting terror at home and abroad, he continues to rule a country that he and his father made dirt poor.
When Kim came to power in 1994, North Korea had virtually nothing to sell in the world. Its stature was about as low as it could get. So miserable has he made life in North Korea that many of its hapless citizens have been reduced to eating tree bark. Maybe as many as 10 percent of these poor souls, while taught to revere Kim Jong Il as a god, have died from starvation in the last decade. Yet today, North Korea is on everyone’s radar screen. Why? Because while there is hardly an economy to speak of, there is the business of missile and weapons development that Kim has carved out to remarkable success. His people may starve, but he has put the money he takes from them to work, turning North Korea into a nuclear menace. His potential to launch nuclear-tipped missiles surely provides food for thought for the world even if he puts no food on the average North Korean’s dinner table. Sure, Kim’s government is reviled in almost every corner of the globe, but just about everyone takes notice. They didn’t a couple of decades ago.
Today, the governments of the United States, China, Russia, Japan, and the Republic of Korea try to work out how to bring Kim Jong Il’s rogue state into the mainstream of international affairs. For years he was threatened, he was coaxed, he was urged to be better, but he also was rewarded by Bill Clinton, at Jimmy Carter’s behest, in the hope that North Korea’s behavior would improve. The rewards Kim’s regime got—in the form of foreign aid, technology transfers, and food relief—came with little or no genuine commitment on Kim’s part, just empty promises. More recently, the six-nation talks seem to have made progress. The task of diminishing his threat appears to be moving forward, although in fits and starts. Finding a path to resolving his nuclear threat can be, and perhaps has been, advanced by accurate predictions and engineering aimed at getting Kim to put his bombs away.
In early 2004 the Department of Defense hired me as a consultant to investigate alternative scenarios for trying to get North Korea to behave better on the nuclear front. I can only sketch the solutions I came up with here, but even so, we can see how to think about such issues. I will focus attention on the scenario that held out the greatest promise for solving the problem. This scenario looks at trade-offs between U.S. political and economic concessions in exchange for North Korean concessions on the nuclear front. Before delving into details, however, let me be perfectly clear that I am taking and seek no credit for whatever progress may have been made. Policy consultants almost never know whether they are being listened to. They almost never know what other sources of advice are being heard or what those sources are saying. All I can do is report what my analysis showed and relate it to what eventually happened.
What kind of information is needed to make reliable predictions and tactical or even strategic recommendations? First, of course, it is essential to define the questions for which we want answers. A question like “How can we get Kim Jong Il to behave better?” is too vague. We need to define the objective more precisely, and we need to know the range of choices that Kim and his government can undertake. In this case, the choices included the possibility that Kim and his regime would refuse to negotiate about nuclear weapons at all; would
