The other day I discussed the debt ceiling fight in terms of game theory, specifically the so-called chicken game.
Here's how a chicken game works:
...two teenagers are driving towards each other on a crash course. The point of the game is to overcome fear and stay on course. The driver that gets scared and swerves away is the loser. The driver that stays on course is the winner and gets the admiration of onlookers. The problem, of course, is that if both stay on course, then both will crash and die.
How do you win a chicken game? Game theory teaches that:
One of the best solutions is to prove that you will not change course .... Limiting your options, and metaphorically becoming immovable like a lighthouse, can show the other side that you will not back down.
In the driving story, a teenager could become immovable by publicly showing he is forcibly locking himself into staying on course–either by using a steering wheel lock or even by detaching the wheel and throwing it away. ...
If you can’t credibly limit your actions, the next best option is to get a reputation for being tough so people don’t bother messing with you.
Unfortunately for the GOP (and the nation's fiscal future), I think President Obama has some significant advantages. First, a single driver always has the advantage over a committee. Obama may have some backseat drivers (although not many and not vocal), but Boehner's got lots of people trying to grab the steering wheel and lots more backseat driving. This makes it harder for Boehner to credibly send signals.
Second, Obama is sending all the right signals. He insists that he will not negotiate and that there is no Plan B.
Third, I think Obama is unlikely to swerve because I think he believes he has got the GOP's number. He believes rolled the Republicans on the fiscal cliff. I'm confident he thinks he can do it again.
Unfotunately, I suspect he's right.
