Political Game Theory Revisited

The "fiscal cliff" negotiations are really just a big ole game of chicken.

There are four possible outcomes:

1. I lose my nerve and turn away and you don't. You win; I lose.
2. You lose your nerve and turn away and I don't. I win; you lose.
3. We both turn away. Compromise. No one wins and no one really loses.
4. No one turns away. CRASH! Everybody loses!!!

"The only winning move is not to play."

When rational people play chicken the only rational result is compromise. But rational people seldom play chicken. Chicken is a game for suicidal maniacs.

Lunatics have a big advantage playing chicken. If you know your opponent doesn't want to die you can recklessly plow ahead confident your opponent will turn away first.

Chicken really gets fun when both sides are insane. Republicans are crazed zealots who would rather amputate their arms than shake hands with President Obama. They might crash the economy just for the hell of it. Democrats confidently believe they will survive the worst possible collision. It's situations like this that remind me of a favorite Mythbusters saying.

Failure Is Always an Option.