Conflict of Resolve - Putin’s Behavior and Game Theory

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Part of our job, as economists, is to think about strategic interactions. In normal times this means that we consider problems such as that of a tax authority that wants to deter taxpayers from cheating on their taxes or that of a firm that has to choose which products to sell at what price. These are problems of strategic decision-making that economists study using the tools offered by game theory.

Game theory originally became popular among US foreign policy circles after the Second World War because it held the promise of making sense of a strategic situation of global dimensions – that of the emerging rivalry between the USA and the USSR. The exemplary researcher of that era is Thomas Schelling. He demonstrated how nuclear weapons and the threat of mutually assured destruction in a nuclear power war turn military conflicts between superpowers from contests of strength into contests of resolve. Remaining in the tradition of Schelling who, in his book “The Strategy of Conflict”, extensively relies on analogies to illustrate his points, we provide an analogy to illustrate Putin’s behavior in the Ukraine war as a conflict of resolve.

On the internet, content creators compete for clicks and likes, and in some of the most popular content, people do silly and outright dangerous things. Members of the online community of “roofers”, for example, take selfies of themselves while standing on the edge at the top of a skyscraper or on a cliff, which they later post on Instagram. What motivates people to take such a high risk? One way to understand is that, by putting evidence of it on the internet, they want to show their resolve: it is the expected clicks and adrenaline they get when they do not fall from the skyscraper’s edge that motivates them to go up in the first place. The competition with other content providers may set off sequences of escalating steps that they will take to climb even higher, to move even closer towards the edge, to not wait for good weather before going up. Schelling observed that, while a country cannot credibly threaten to use nuclear weapons when it entails its own assured destruction, it might be willing, just like a roofer, to allow for a certain chance of disaster occurring. If its appetite for taking a chance is higher than that of its rivals, it gives the country an upper edge in international bargaining.

The possibility that the opponent’s actions are, even mildly, unpredictable can have large strategic ramifications. For example, economist and political activist Daniel Ellsberg noticed how blackmail is more effective if the blackmailer appears to be “mad”, so that their threats of inflicting massive harm to all parties involved in the conflict, including themselves, are credible. To manipulate the opponent’s expectations in order to increase chances of a favorable outcome, it helps “to be unpredictable, to seem a little erratic, impulsive, unstable.” Ellsberg wrote the article lining out his “madman theory” in 1959, when the strategic ramifications of the nuclear age were still being figured out. He concludes his article with warning that even if no one aspires to be like Hitler, they might still learn how Hitler’s public display of his love for war and destruction worked for him to have the upper hand in negotiations with his French and British equivalents throughout the 1930s. The destructive potential of nuclear weapons increases both the return of acting mad and the risks associated with a mad country leader. Political scientists have used this argument to analyze the behavior of former US presidents such as Richard Nixon or Donald Trump. We can similarly interpret actions of Vladimir Putin and his regime as attempts to reinforce its escalatory threats.

For example, Putin’s regime exerts massive effort in an attempt to influence the western perception of its objectives. In his lengthy 2021 essay “On the Historical Unity of Russians and Ukrainians”, Putin denies the existence of an independent Ukrainian nation, a sentiment that has long been echoed by Kremlin ideologues. Within this ideology, retaining Ukraine in the Russian sphere of influence is a key issue for the future of Russian imperialist ambitions. This in turn increases the perceived benefit of Putin’s regime bringing Ukraine under its control and increases the perceived cost for the regime should Ukraine not submit. The large scale of the invasion of Ukraine also serves to direct our perception of Putin’s strategy. Just as a poker player who decides to be pot committed to increase the credibility of their bluff, Putin may have opted for a large invasion to increase the cost of a retreat to a level at which it looks implausible.

This strategy involves the idea of commitment, which describes situations in which a player might optimally choose to tie his own hands to convince the opponent that they will or will not take a certain action in the future. Putin might have perceived a commitment against a swift retreat as optimal because it raises the potential costs for other countries who consider intervening in the war. The concept of commitment could also permeate Putin’s choice of advice and information. Media reports of his increased isolation from advisors, which accelerated during the Covid-19 pandemic, pose questions about the extent to which Putin receives accurate information about the current state of Russia’s military and economic capacity. This is not necessarily to Putin’s disadvantage since a blackmailer does not always benefit from being well informed about their objective bargaining position: By choosing not to receive realistic reassessments of their current bargaining position – which Putin can do by surrounding himself with "yesmen" who refrain from transmitting bad news – a blackmailer may force the opponent to submit to demands that only make sense in the blackmailer’s imagined world.

One final piece of the puzzle regards Putin’s personality. In another classic game theory book, Luce and Raiffa notice that “in the event that both players attempt to make plausible threats the result becomes indeterminate, depending on the bargaining personalities of the players.” Putin’s reign is now more than 20 years long, and the personality cult around him is a main feature of Russian propaganda. Putin is perceived as being an overly competitive and proud leader who hates to lose. What if Putin does not care to win, but only not to lose? Following recent research in behavioral economics and psychology, this psychological feature is not uncommon, and it is easy to imagine a very competitive actor who despises to lose infinitely more than how much he cares about the size of the potential reward. In the current war scenario, a full retreat of the Russian army would arguably constitute a clear loss for Putin. This has led to the search for more limited military rewards - i.e. annexation of the regions of Luhansk and Donbas - and the diffusion of threats of nuclear retaliation in the Russian media.

Game theory is not an exact science. In the opinion of the prominent game theorist Ariel Rubinstein, it should be best seen as a collection of fables that “enables us to see a situation in life from a new angle and perhaps influence our action”. Much of the intentions behind the action of Putin and his government – whether they are expressions of truly held beliefs and ideologies or merely strategic feints – remain elusive. The game-theoretic fables that we applied in this essay, however, illustrate how such ambiguity might be the result of a deliberate strategic choice.

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6.5.2022