Nested games theory can also help to better understand the Russian war against Ukraine, and unfortunately, it shows that the risk of escalation is increasing. Most war ratings measure the relative military strengths of each side. Surely that’s important – but so are nested games. Russia and Ukraine are not monolithic. Each country encompasses many diverse interests and opinions, especially if “Ukraine plus its allies” is defined as one of the parties to the conflict.
Lithuania has announced that it will block sanctioned rail shipments of goods to the Russian enclave of Kaliningrad, an outpost of Russian territory surrounded by Lithuania, Poland and the Baltic Sea, with no direct land connection to the Russian mainland. Lithuania claims, not wrongly, that such a blockade stems from EU sanctions against Russia.
Yet, from Russia’s perspective, it may look like an act of war when a NATO member cuts part of the connection between Kaliningrad and the mainland. Various Russian officials have threatened escalation and retaliation, while leaving details vague. Russia also claims that this blockade violates previous transport agreements with Lithuania.
If Lithuania had not imposed this blockade when it did, it is not clear that the European Union would have forced it to do so (delaying or renegotiating EU commitments is not without precedent, especially when pre-existing agreements with other countries can be cited). In this sense, the blockade was a strategic decision on the part of Lithuania. One view of Lithuania’s strategy is that it forces or induces its allies to affirm their support, at a more rather than less favorable time of hostilities.
It is too early to say whether this is a wise strategy for Lithuania. But the fact is that the interests of Lithuania are not identical to those of NATO, the EU or the United States. Given the risk of Russian escalation and given my opinion that punishing Kaliningrad is not a priority, I personally would have preferred that Lithuania had not taken this decision.
Instead, by playing an interlocking game, Lithuania made things riskier for some of the other parties involved. Lithuania has also made the course of the conflict more difficult to predict, as hostilities could also spread to the Baltic countries.
Now some of the smaller players in the region, especially those most fearful of Russia, could see advantages in escalating the conflict. It’s conventional wisdom that time is now on Russia’s side, so smaller countries can feel a sense of urgency that, say, Germany doesn’t.
Nested games tend to complicate rather than simplify situations. Is the disruptive agent here Lithuania or the United States, as some suggest? What exactly are the differences of opinion within the Lithuanian government? What does Poland think of the timing of this possible escalation? Speaking of which, Poland has always played interlocking games as it faces ongoing decisions about how to be directly involved in supplying arms to Ukraine, which may increase the risk of Russian attacks on Polish territory.
Just describing all the different questions can be dizzying. In this way, nested game theory functions as a sort of alternative to game theory and its vaunted ability to predict the future. But there also lies the danger.
Game theory isn’t always correct about the future, of course. But it’s a useful discipline because it forces people to envision the worst possible outcome. The risk of nested game theory is that it can lead to acceptance of the internal logic of a narrow faction or situation – and once wars have started they tend to develop their own logics. . Throughout history, far too many wars have gotten out of hand for reasons that seem arbitrary, absurd, or just plain unnecessary, but make sense in an interlocking game theory.
All of this is a way of saying that the value of nested game theory is its explanatory power, not its predictive value. And that once nested games take hold, the risk of escalation increases.
More from Bloomberg Opinion:
• A long war in Ukraine could bring global chaos: Hal Brands
• Seven worst scenarios of the war in Ukraine: Niall Ferguson
• Difficult Lessons from 100 Days of the Ukrainian War: Leonid Bershidsky
• Putin can’t keep Russian mothers silent: Clara Ferreira Marques
This column does not necessarily reflect the opinion of the Editorial Board or of Bloomberg LP and its owners.
Tyler Cowen is a Bloomberg Opinion columnist. He is a professor of economics at George Mason University and writes for the Marginal Revolution blog. He is co-author of “Talent: How to Identify the Energizers, Creatives and Winners in the World”.
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