Game Theory Says Don't Bet Against a No-Deal Brexit
The parties are trying to play two different versions of the prisoner’s dilemma; to agree, they need to pick one.
Is she playing by the wrong rules?
Photographer: Simon Dawson/BloombergThe U.K. parliament’s votes on Tuesday night may not have made it easy for anyone involved in the Brexit process, but they mark a moment of clarity from a game theory point of view.
It is apparent that the U.K., represented by the parliament, wants to play a one-off prisoner’s dilemma game with the European Union. The EU, for its part, is playing an infinitely repeated prisoner’s dilemma. Both parties are acting rationally in their own way – within the constraints of the different games they are playing. A cooperative outcome is only possible if one of the sides accepts the other’s vision of what game is being played.