This process involves exploiting or altering people’s perceptions of a situation by looking within the model’s round-by-round output to work out who is responsible for shifts in positions and how to counter those shifts if they have bad consequences for the client. The process is no different whether the problem is resolving Iran’s nuclear program, figuring out what al-Qaeda is likely to do, or facilitating the merger of companies. Every one of these situations involves humans who are not all that different from one another, regardless of where they go to sleep at night.
So in the next chapter I’ll look at a few current problems such as those listed above to see how we might engineer beneficial outcomes. The examples will help illustrate the potential costs of failing to see or to address what may be around the corner.
7
FAST-FORWARD THE PRESENT
ONE OF THE great benefits of being affiliated with Stanford’s Hoover Institution is the opportunity to participate in small seminars with some of the world’s most interesting scholars and policy makers. These seminars are often off the record, which means that there is the chance for frank exchanges of views on important issues of the day. The discussion during one such seminar, on the Israeli-Palestinian dispute, led me to consider how game-theory reasoning might contribute to tackling the seemingly insurmountable obstacles to peace. The approach I thought about is not a solution to the dispute, but it is a potentially useful step toward advancing the real prospect of a lasting peace.
For all of its limitations, the idea I came up with provides an example of how game-theory reasoning can nudge us in a new direction even under the most seemingly intractable circumstances. If game-theory logic can foster progress on the Israeli-Palestinian dispute, it surely will have contributed to solving one of the most important foreign policy problems of our time. With that in mind, let’s have a fresh look at Israeli-Palestinian relations. And who knows, maybe somebody reading this book can help turn the idea into reality or can point out some fatal flaw in it.
LET’S MAKE A DEAL
Land for peace and peace for land are two formulas that are doomed to failure, whether in the Middle East or anywhere else. It’s an idea that sounds sensible, so it attracts lots of attention. Ehud Barak proposed a land-for- peace deal at the July 2000 Camp David summit between him (he was Israel’s prime minister), Yasser Arafat (then president of the Palestinian Authority), and President Bill Clinton. The Oslo Accords in 1993 also were a land-for- peace deal. Barak’s Camp David plan and its later variants failed. The Roadmap for Peace, another land-for-peace arrangement, failed too. All land-for-peace or peace-for-land deals by themselves will do the same. They are no way to end violence, because neither assures either side that the other is making a lasting promise, a credible commitment.
Each promise—land for peace or peace for land—suffers from what in game theory is sometimes called a time inconsistency problem. That is, one party gives an irreversible benefit to the other party today in the hope that the other will reciprocate tomorrow. Almost certainly instead, the side getting the irreversible benefit exploits it to seek even more gains before delivering on its promises. Giving up land on the promise of peace inevitably leads to demands for more land before peace is granted. Giving peace on the promise of land later has much the same problem. The peace giver lays down its arms to show good faith, but then the land giver is free to renege, feeling no compulsion to follow through with land the opponent can no longer take.1
Time inconsistency problems arise in many contexts, not just land for peace or peace for land. In fact, we saw an example of this problem earlier when we discussed North Korea. The threat of reneging on promises once an adversary has disarmed is exactly why asking Kim Jong Il to dismantle his nuclear capability won’t work, but negotiating a deal in which he agrees to disable his nuclear program can work. The problem is no less consequential in the Middle East.
Look at the decision by Israel’s hard-liner prime minister Ariel Sharon to withdraw (unilaterally) from Gaza in August 2005, ceding that territory to the Palestinians. An important part of Sharon’s motivation seems to be that he concluded it was too costly to defend Gaza. So he chose to make Israeli settlers abandon their homes, whose existence was a major flashpoint with Palestinians, in the hope that yielding Gaza would help promote goodwill and peace. The belief that good deeds, whatever their motivation, will elicit a good response reflects optimism about human nature that sometimes is met by reality but all too often is met instead with greed and aggression. As you know, game theory rarely takes an optimistic view of human nature. Sharon’s optimism was predictably wrong. Shortly after the democratically elected government run by Hamas in the Palestinian Authority used force to oust Palestinian president Mahmoud Abbas’s Fatah from Gaza, Hamas increased missile attacks against Israeli towns near the Gaza border. Land, freely given with no strings attached, did not produce peace. It produced a demand for more land and an increase in violence.
Mind you, this failure on behalf of the pursuit of peace is not some particular flaw among Palestinians. The Israelis have done much the same in the past. Having defeated their Arab rivals in the 1967 war and then again in 1973, Israel not only occupied previously controlled Egyptian, Syrian, Jordanian, and Palestinian land but also allowed the spread of settlements presumptively justified by the biblical covenant between Abraham and God. In fact, Israeli settlements almost always occupy the high ground surrounding Palestinian villages, making it all but impossible for Palestinians to enjoy a sense of security within their own homes. And even more troubling, Israel for decades restricted the movement of Palestinians into and out of Israel, just as they had done within Israel to Israeli citizens of Palestinian extraction. The upshot is that the Israeli government prevented Palestinians from following a peaceful road to independence by restricting their freedom of assembly. When Israel had the opportunity to promote peace with Palestinians after the 1967 war, it fell short, just as the Palestinians have fallen short in efforts to promote peace with the Israelis.
Every land-for-peace and peace-for-land formula I know of has ended in failure. Every such effort, whether unilateral, bilateral, or multilateral, has, if anything, made the situation worse by raising false hopes only to see them dashed. They are always dashed because the peacemakers simply do not pay attention to the time inconsistency in their strategy. They rely on goodwill and building trust when there is neither. Instead, they should leverage progress toward peace on the narrow self-interest of the contending sides. They should consider whether what they propose is a self-enforcing strategy from which no one has an incentive to deviate, rather than looking for an approach that requires mutual cooperation. Remember the prisoner’s dilemma from Chapter 3? Both players in that game are better off if they coordinate with each other to pursue joint cooperation instead of ending up competing with one another. The problem is that each is even better off by not cooperating if the other player chooses to cooperate. The upshot is that neither cooperates, leaving both worse off than they could have been. That, in fact, is the dilemma. Like the Israeli-Palestinian dispute, joint cooperation is not a sustainable solution unless the structure of the game changes first.
One way to change the game is to make costs and benefits change directly and automatically in response to the actions chosen by each player. A self-enforcing strategy solves this problem and can help promote peace and prosperity for each side. Here I would like to use the power of game-theory thinking to propose an important step toward peace between Palestinians and Israelis. It is not a comprehensive peace plan, but it is a way to make peace more likely. What I will say follows logically from game-theory reasoning, but it is not a mere assessment of what is likely to happen. It is a statement of logic in support of a way to end violence. It is a prescription for
