What game theorists knew 40 years ago that is often forgotten today

Negotiations and other games are commonly intertwined

When I started this publication, I planned to mix theory and application. That hasn’t really worked out yet. Here’s a small step toward redressing the balance.

Game theory, when newer, was an intensely interdisciplinary subject. Back in 1979, I submitted my PhD thesis in mathematics on the subject -- but 2/3 of my thesis committee was at the Harvard Business School. My thesis extended a theorem proved by Lloyd Shapley, who later got the Nobel Prize in economics. A couple years later, his minor excitement at meeting me helped secure a job offer from his then-employer, the public policy research institution RAND Corporation. I also taught the first game theory class in the Harvard math department; my best student was Andrei Shleifer, who later became one of the world’s top economists.

I moved from math to the Kennedy School of Government. There, one of my frequent lunch companions was applied game theorist Thomas Schelling, who was both the most important nuclear escalation theorist of all time and another future Nobel Laureate in economics. The only assistant professorship I was ever offered was at a business school.

I don’t think my experiences with discipline-crossing were all that unique.

Game theory retains much of that interdisciplinary feel today – but not all of it. Back then, if you were an expert on game theory, you were almost automatically an expert on negotiation too. It seems this connection has now been partly lost. My explication of escalation taboos and permissions as the results of (primarily) public negotiations would have been obvious to Tom Schelling – yet somehow it is novel today. Much the same goes for my cautions about the nuclear booby-trap Russia created from that otherwise disadvantageous deal.

Perhaps what’s been forgotten is qualitative game theory itself. Military analysts, following von Clausewitz, understand that war and political negotiations are joined at the hip. But they don’t seem to recognize that they’re doing game theory. Similar stories could be told about civilian politics as well.

What’s more: Some of the best ideas in game theory are clever ways to set or alter a game’s rules, and making such changes almost always involves nontrivial negotiations.

I plan to write more about negotiation game theory in the future. Please stay tuned.

Edit: Fittingly, Graham Allison’s appreciation of Tom Schelling was placed in Negotiation Journal.