Game of Chicken and the US Government Shutdown: What Game Theory Can Tell Us About Likely Outcomes

30 September 2013, 1238 EDT

As I’m sure all astute Duck readers are aware, today marks a critical day in the US House and Senate – if no deal is struck today on a spending bill, the US government will shut down at one minute after midnight on Tuesday morning.  The issue at the heart of the controversy: a series of amendments to the spending bill that concern the Affordable Care Act (so-called “Obamacare”).  In general, House Republicans are in favor of the amendments; Senate Democrats are against the amendments.   So, both sides are holding firm to their stance on the amendments in hopes that the other side caves in before tomorrow.  What are the likely outcomes of this situation?

Now, I’m not a specialist in American Politics.  I can follow-along on tv and in the political science journals but, quite bluntly, that’s it.  However, I do know my classic game theory games and this scenario seems eerily similar to the canonical Game of Chicken.  Remember this one? Two hormonal teenagers are racing directly towards each other in souped-up cars on a deserted highway while their friends watch (I actually prefer the scenario in Footloose where tractors were the vehicle of choice).  Although the teenagers would be relatively happy if both of them were to swerve, both teenagers want the other youth to swerve first and become the “chicken,” effectively giving the winning teen the prom date/letterman’s jacket/bragging rights.   The problem: if neither teen swerves, the result would be disastrous.  As James Morrow states in his 1994 Game Theory for Political Scientists, if neither teen swerves, “many hormones would be spilt on the pavement” (93).  Like the classic game of chicken, as many in the popular media have remarked, the Republicans and Democrats are driving towards each other, each hoping that the other will “swerve first” on the issue of the spending bill amendments, avoiding the car-crash that would be a government shutdown.

What can the game theory version of the game of chicken teach us about this situation?  I think the classic equilibrium solutions to the game of chicken imply three things with respect to the current government crisis.  First, someone may decide to “swerve” today.  There are three Nash equilibria (definition: if all players adopt these strategies, no one has a unilateral incentive to defect) to the game of chicken.  Two are pure –strategy equilibria: in each of these, one of the players decides to swerve while the other remains steadfast.  The other Nash equilibrium is a mixed strategy game where each party “mixes” or “randomize[s]” (Morrow 1994, 87) between swerving or not swerving.  This implies my second point: unfortunately for all of us, the mixing strategy means that the mess-on-the-pavement actually could happen.

My third point is actually the most difficult to swallow.  If we move from just focusing on Nash equilibria in a scenario with only 2 players playing the game to a scenario where there is a random pairing of individuals in an evolving environment where there can be “mutants” (this is the basic scenario needed to examine evolutionary stable strategies), the mixed strategy Nash equlibrium is the only equilibria solution that holds as an evolutionary stable strategy (ESS).  What this means: the likelihood of blood on the highway tomorrow morning might actually be pretty great.  I recommend holding off purchasing those tickets to the Grand Canyon.