A game theory guide to understanding the cynical genius of Russia’s president.
- By Daniel AltmanDaniel Altman is the owner of North Yard Analytics LLC, a sports data consulting firm, and an adjunct associate professor of economics at New York University’s Stern School of Business.
Ah, Vladimir Putin. He’s the icy-eyed former KGB colonel that everyone loves to hate. Does his ambition have no bounds? Why can’t he just be a nice guy? Can’t he be reasoned with? This handwringing misses the point. In fact, reasoning is his strong suit — and the West could learn a lot from him.
Putin wants to make Russia great and powerful again, thus cementing his own legacy as a great and powerful leader. Because this situation is not the status quo, he must find ways to change the state of the world. But there is no point taking big risks; every time he gambles and loses, Russia appears silly and weak. So he follows a simple three-step process designed to guarantee success. It could come right out of a game theory textbook, and this is how I think it works:
1. Locate the opportunity. Besides ice hockey, Putin only plays games that he knows he can win. Like a game theorist, he looks at his possible moves and the moves of his opponents. He plays through every scenario, all the way to the end. If he wins outright or at least is better off under all the possible outcomes, then he’s in. Very rarely is he forced to play a game he doesn’t want to play.
2. Change the status quo. If Putin doesn’t act, then the world will go on its merry way, which is not what he wants. So, he has to provide the impetus for things to change to his liking. He can do this directly or through proxies who may or may not know as much about the game as he does. The important part is that his chosen proxies are capable of achieving the change, even if they alone cannot make the change permanent.
3. Force the opponents to accept the new status quo. Putin’s favorite kind of opponent is the one who accepts losing, thus confirming the change he desires. In order to ensure that his opponent accepts the loss, Putin must make any other reaction less desirable.
Putin’s actions in Ukraine are a case in point. His overarching goals are to enhance Russian power and push back the West by expanding his spheres of control and influence. His preference might have been to do this in Ukraine peacefully and across the country as a whole, but he was also willing to use violence and take what was available piecemeal.
Here is how he may have seen the game play out late last year. First, he would offer a package of financial aid to Ukraine. He knew his ally, the pro-Russian president Viktor Yanukovych, would accept. If all was well thereafter, mission accomplished — Ukraine would once again be Russia’s client state. If all was not well — that is, if there were political upheaval, protests, unrest, or all three — then the country would be unstable. And an unstable Ukraine would be ripe for the picking, especially since parts of it were strongly sympathetic to Russia.
If Ukraine did become unstable, then Putin’s next move would be to invade Crimea and somehow legitimize its return to Russia. This would be the first step in a piecemeal recovery of power over Ukraine. Achieving the change itself would not be difficult. But he would also have to force his opponents to accept it.
By fostering the same sort of instability in eastern Ukraine, Putin would raise the stakes. He would create an atmosphere where the local government and the West would fear a deeper incursion into Ukrainian territory and the possibility of open warfare, which is where we are now.
Putin’s remaining moves are fairly straightforward. Having created sufficient tension in eastern Ukraine to worry his opponents, he will finally appear to listen to reason. He’ll disown the pro-Russian forces there (whose actions he instigated), while privately reassuring them of his support and explaining that it was not the right time for further action. The West will call his move a step in the right direction, adopt a guardedly optimistic tone about Ukraine, and allow its economic sanctions against Russia to expire. Putin’s opponents, perhaps including a government in Kiev eager to return to politics as usual (and in need of Russian energy), will declare victory; after all, Russia retreated and war was avoided. Crimea’s return to Russia will become a footnote to history, except for a few small protests around the White House and the United Nations every year in late February.
All in all, it will be a good half year’s work. Russia will have exerted and enlarged its power, and Putin’s opponents will be left shaking their heads again. What lessons might they take from having played his game? Again, I would propose three critical points:
1. Assess vulnerabilities, both present and potential. The games Putin will play are not always readily apparent.Ukraine was not obviously unstable, but Putin had the foresight to see how it might become destabilized.Every situation has to be assessed not just in the present but also in all its contingencies. The whole point is to identify games he may be willing to play and then eliminate them by bolstering the contingencies.
2. Learn about your opponent’s objectives. The West was powerless to stop Putin because he didn’t care about anything it was willing to do as much as he cared about Crimea. In fact, he may have been able to pay a much higher cost than what the West was willing to exact. But by revealing his imperviousness to this cost, he also revealed how he valued different currencies — territory, money, reputation, etc. — in the geopolitical market.
3. Use backward induction. A fundamental tool in game theory is backward induction, whereby analysts consider what players will do in the final stage of the game to predict their actions earlier on. For example, if I know that you will always respond to an attack by turning the other cheek, then I will be less likely to compromise during talks meant to avert conflict and more likely to attack you once they fail. Sound familiar?
Recently Angela Merkel, the German chancellor, suggested that Putin was living in a world of his own, divorced from reality. The opposite is true. Putin is a rational actor who steadily pursues his interests, which are well known to the world at large. Appealing to morality, international law, or any other arbiter of behavior other than pure pragmatism is unlikely to succeed with him. Yet by the same token, his straightforward approach makes him the easiest sort of opponent for a similarly minded strategist. He must be surprised that the West still performs so badly against him.