Inclement weather is a big deal in the airline industry—it is responsible for nearly 40 percent of the total amount of time flights are delayed. Wind, fog, snow, and thunderstorms limit the rate at which planes can safely take off and land. That throws airlines’ and air traffic controllers’ carefully crafted schedules into disarray. The Federal Aviation Administration has to step in to make sure everyone gets a fair slot on the runways.

In the past, the FAA used a procedure called Grover-Jack. It assigned arrival slots during inclement weather based on feasible departure times, which were reported by the airlines themselves. Under Grover-Jack, if a plane had a mechanical problem, that delay was added to the weather delay, penalizing the airline twice. Airlines would deliberately withhold information about mechanical and other problems to avoid this double penalty. Sometimes they would be able to land a different flight in the open slot, but if none was ready the slot would go unused. That meant arrival slots—which were already limited—were being wasted, lengthening delays. This was bad for everyone.

Eventually the FAA developed a new scheme that assigns arrival slots based on their original schedule, not actual schedule. If a flight cannot use a weather-delayed slot, an algorithm called Compression steps in to reassign it. Compression works by first looking for flights by the same airline. If none exist, it moves on to other carriers to look for a trade. That trading is the fundamental advantage Compression has over Grover-Jack. When an airline decides a slot is useless, it trades it for a later one, usually owned by the carrier that took the heretofore useless slot. The airline that gave up the initial slot is rewarded because the one it accepts is typically earlier than it would have received otherwise.

Because of these incentives, the FAA says the Compression algorithm is immune to the sort of games that were played under Grover-Jack. And as far as anyone knew, that seemed to be the case. But no one ever sat down to make sure.

Enter James Schummer and Rakesh Vohra, associate professor and professor, respectively, of managerial economics and decision sciences at the Kellogg School of Management. They undertook the first rigorous investigation of the Compression algorithm. While they show that Compression is largely free from manipulation, they do reveal some potential problems.

Identifying the Problems
The first issue is that Compression merely discourages manipulation—it does not preclude it entirely. One trick would be if an airline could “destroy” a slot. “Destroying a slot means pretending there’s a flight in there and isn’t really in there. Basically that slot is not available,” Vohra says. That could give an airline an advantage by denying their competitors that slot. While Schummer and Vohra say that slot destruction is a shortcoming of Compression, it will not necessarily present a problem in the real world.

“An airline would actually have to run the computations to find the situation,” Schummer remarks, adding even that is only half the battle. “At some point the FAA realizes that the plane you were supposed to land there hasn’t taken off yet back at the other airport.” The slot would remain empty, but the ruse would be exposed and the airline likely punished. Such a brief gain would not be worth the trouble.

Still, there is nothing in the Compression algorithm that prevents slot destruction. As game theorists who prefer to tackle all shortcomings of a model, Schummer and Vohra are bothered by this issue, though they have not yet devised a way to address it mathematically.

The second problem with Compression that Schummer and Vohra identified is more tractable, and one for which they have a solution. Under Compression, it is possible that a subset of airlines could break off from the main group. Such a schism would occur if those airlines thought they could fare better trading slots among themselves rather than in the larger group.

Arrival slots technically belong to the federal government—airspace is a public good owned by everyone in the country—but airlines have claimed squatters rights because they have invested money in staffing and scheduling around those times. Schummer and Vohra say Compression does not go far enough to respect those rights, which could lead to splinter groups.

To see how a splinter group would affect the air traffic system, let’s say that of three carriers—Delta, American, and United—two of them—United and American—decide to trade slots with each other and exclude Delta. That would give United and American first choice from their collective pool of slots. But suppose a Delta flight would be a better fit for one of those slots, easing congestion more than a United or American flight. Because Delta is not in that group, United and American could effectively deny them that slot. United and American would gain the advantage, but the system as a whole would be worse off.

Such blocking coalitions would reduce the pool of slots for other airlines and harm the efficiency of the allocation process. Fortunately, these coalitions are not likely to form. “As a practical matter, given the amount of time in which airlines have to do these arrangements, it’s not clear that it’s feasible for them to do that,” Vohra says.

A Better System
So given that neither slot destruction nor splinter groups are likely under the Compression algorithm, why bother searching for such theoretical flaws? Because in the process Schummer and Vohra have found another algorithm—called Trade Cycle—that they say would both eliminate those theoretical problems and be better overall.

Trade Cycle is based on an old economic theory called the house trading model. In the house trading model, the fundamental question is, Vohra says, “Without money, is there a way to trade that in some sense is good?” To understand how that works, let’s pretend you ask three people to point to the owner of another house they would like to trade into. Any sequence of owners who form a cycle—person 1 points to person 2 who points to person 3 who points to person 1—can trade with each other and each receives their favorite house by giving up their current house. These three owners can then move into their new homes, and the process starts all over again. “No one has an incentive to lie about their favorite house at any time,” Vohra points out. “Why is that? At the beginning, I ask you to point to your favorite house. You wouldn’t have gained by pretending your favorite house was your number four choice.” The same goes for airlines—in pointing to their favorite slot, there is no incentive to lie.

When applying the house trading model to flight arrival slots, Vohra says, “there are a couple of wrinkles. In the house trading model, every agent owns a single house. Here agents are airlines and they own multiple homes.” That makes the mathematics a bit trickier, but not so onerous that the problems cannot be solved.

Eventually, all airlines receive slots that are better than the ones they started out with, or at least no worse. The key part about Trade Cycle—the part that makes it work—is that it respects the property rights of airlines and their slots. When trading, an airline may be giving up their right to that slot, but in return they are receiving one that is worth more to them. There is no need for shenanigans like slot destruction or slot-trading cartels. The result, Schummer and Vohra hope, would be a slot assignment system that would function even more smoothly, reducing the number of minutes flights are delayed.

Schummer and Vohra have yet to present their paper to the FAA, though they are open to the idea. But before they do, they want make sure they have worked through all the details. “One approach we sometimes take as game theorists is to first solve a problem in reduced form, before enriching it with details to see which details really matter.”

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In two recent papers, Rauh and Robert Novy-Marx, an assistant professor at the University of Rochester, show that these pensions are dangerously underfunded, that they are based on faulty economic assumptions, and that the impact to taxpayers could be significant. Ultimately, Rauh says, it could result in people leaving cities in order to avoid the fallout.

Questionable Logic at Fault
According to Rauh, the huge discrepancy between state and local government pension assets and liabilities comes from what is essentially bad accounting. The Governmental Accounting Standards Board (GASB), a nongovernmental group that sets guiding principles, allows these governments to measure the cost of providing pension benefits using expected returns on the assets in pension funds. They are allowed to say, in other words, that because a particular portfolio has historically delivered an 8 percent return, it will always deliver 8 percent. Under that questionable logic, you could assume that a mutual fund you bought in 1982 would have the same return for the next 30 years, and you could reduce the stated value of your debts accordingly.

“In the mid-’90s,” Rauh says, “the GASB legitimized this accounting that governments had been practicing for years. It’s very different from what would be done in the private sector, and very different from what logic says you should be able to do.”

It is also, Rauh says, a self-perpetuating cycle. “What short-sighted politicians want is to be able to spend money now that you don’t have to collect in tax revenues now. These problems have been put off into the future.”

Back in 2007, when Rauh and Novy-Marx first began work on a paper titled “Public Pension Promises: How Big Are They and What Are They Worth?”, equity markets were close to all-time highs. State and local governments claimed their pension systems were fully funded. “We looked and said, in fact they are assuming that the success that these funds have had, that the equity markets have had, over the last 30 years is just going to continue indefinitely. They’re assuming that every dollar in the pension fund is going to continue to grow without risk at 8 percent.”

Subsequently, of course, the financial crisis hit—and these same pensions lost $1 trillion in assets. Rauh and Novy-Marx are not the first to point out that government accounting differs from private-sector accounting. But they are the first to precisely measure it. Government reports, Rauh says, are “opaque and not standardized.”

“One thing you want to know is the outflows. What has been promised every year in the future? That seems like something that any taxpayer should have the right to know. But they’re not required to disclose that.” So Rauh and Novy-Marx set out to reverse-engineer these cash flows and then to “stress-test the assumptions,” to discover what happens when they re-evaluated cash flows using real discount rates that account for risk in the markets. The answer—that $4 trillion figure—should, Rauh says, be a cause for concern.

Analyzing the Numbers
In another recent paper, “The Revenue Demands of Public Employee Pension Promises,” Novy-Marx and Rauh calculated the cost to taxpayers of the unfunded liabilities. “People have trouble thinking in trillions,” Rauh says. “What does a trillion dollars really mean?” If you divide $4 trillion by the number of households in the United States, 150 million, it works out to $26,000 per household. But even that figure is hard to interpret, because it only reflects the present value.

So the researchers went further, to calculate the impact of that number on households in terms of increased taxes or decreased spending each year. On average, across the country, fully funding promised pensions could result in a tax hike of nearly $1,400 per household, every year.

Of course, the real amount would vary greatly by geography. As they write in the paper, “Taxpayers may leave the states that are the most burdened by the legacy liabilities and look for places with lower taxes and better public services.” Rauh plans to research these impacts.

If Chicago, for instance, faces a “day of reckoning” with its pensions and has to pay them out, residents might move to the suburbs to avoid paying higher taxes and facing cuts in services as the city struggles to meet its obligations. “That’s something that we expect to happen as state and local governments try to deal with these problems,” Rauh says. As people leave these areas, that only compounds the problem by reducing the tax base—leading to even greater tax increases for those who stay.

So what is the solution? The first thing, Rauh says, is to stop the problem from getting any worse. “If you have a friend who calls you up and says, ‘I have $100,000 in credit card debt, what can I do?,’ the first thing is to tell them to stop increasing the debt.” While there is no easy or pleasant solution, starting to pay down or renegotiate the debt is essential. “But it has to be recognized what the value of the debt is, what the value of the promises are. Then,” Rauh says, “we can think about how we can pay for it.”

Further reading:
Joshua Rauh blogs about this and related topics at Everything Finance.

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Psychologists have already studied hot-cold empathy gaps in contexts ranging from addiction treatment to anger management. After observing the political controversies associated with prisoner abuses at Abu Ghraib and Guantanamo Bay—not to mention stunts like Muller’s—Nordgren and his colleagues set out to study whether the legal definition of torture might be biased by a similar empathy gap.

A Blurry Line
Nearly all nations legally prohibit physical torture of prisoners. But waterboarding, solitary confinement, exposure to extreme temperatures, and other “enhanced interrogation techniques” blur the distinction between torture and ethical treatment. “The legal standard for defining torture is pain severity,” Nordgren explains. “This standard requires that people can form an accurate view of how bad these experiences are. Our argument is that people are inaccurate in a systematic direction—that these techniques are probably worse than we imagine them to be.”

Muller’s waterboarding experience may have provided anecdotal support for Nordgren’s hypothesis, but performing an identical procedure on dozens of research participants would be impractical as well as unethical. So Nordgren and his colleagues conducted a quartet of studies designed to “give people a taste of the specific form of discomfort produced by a specific interrogation tactic, while also staying within ethical boundaries.”

The first study aimed to examine whether hot-cold empathy gaps influenced participants’ opinions on solitary confinement—a commonly used enhanced interrogation technique. According to Nordgren and his co-authors, “considerable evidence suggests that the pain derived from social distress shares phenomenological, neurological, and psychological correlates to physical pain.” In order to induce the “social pain” of exclusion in his cohort of 83 undergraduates, Nordgren utilized a video game designed by psychologists, called Cyberball, which simulates a ball-tossing task between the participant and two other players. (The other players are automated by the game, but are displayed to the participant as “real” players with names.) The “no-pain group” of undergraduates experienced normal gameplay, receiving tosses from the other players about one third of the time. But the “social pain group” only seldom received tosses.

“It seems like a trivial exercise,” Nordgren explains, “but people are so sensitive to issues of fairness that people who are being excluded find it to be very uncomfortable. We thought that would be about as close as we could get to simulating the social pain of solitary confinement without locking people away in the lab for a few weeks.” Indeed, after playing Cyberball, both groups were asked whether they support or oppose solitary confinement in U.S. jails—and 63 percent of the “social pain group” answered in the negative, compared to 33 percent of the “no pain group.” The former group also rated the pain of solitary confinement as more severe than those in the latter group.

The experimenters’ three other studies were similarly designed to expose empathy gaps in assessing the ethicality of other interrogation techniques, such as sleep deprivation and exposure to cold temperatures. Sleep deprivation was modeled by a cohort of students with full-time jobs taking night-school classes, while cold-temperature exposure was modeled by having participants either immerse their dominant arm in a bucket of ice water or stand outside in 38-degree weather for three minutes without a jacket. In each case, participants experiencing the “hot” emotional state consistently rated the severity of pain associated with sleep deprivation or extreme-temperature exposure to be worse compared to ratings given by “no-pain” participants.

Past Experience Important
These results tended to confirm the intuitions that Nordgren and his co-authors had about how empathy gaps can bias ethical assessments. But one particular result surprised them. The third study in their quartet was designed to examine whether prior experience of a “pain condition” could help people bridge the empathy gap in accurately assessing its severity. As the authors state in their paper: “It is well documented that psychologists helped conduct advanced interrogations at Guantanamo Bay; one justification for their participation was that during previous training, they had endured the precise techniques they used on detainees.”

But results of Nordgren’s experiment showed that experiencing a painful technique (such as exposure to cold) just ten minutes before answering a questionnaire about its severity opened up an even wider empathy gap than the others they had observed. Surprisingly, participants in this “prior pain condition” rated its severity as lower than those who experienced no pain at all. Undergoing an enhanced interrogation technique in the past “doesn’t seem like it fosters empathy,” Nordgren says. “If anything, it may make people more callous.”

Why might the simple passing of time make people who have personally experienced pain less able to accurately assess its severity? “They are armed with the knowledge that they made it through,” Nordgren says, “and so they tend to say, ‘It must not have been that bad’.” In other words, if “Mancow” Muller had been asked to rate the severity of his waterboarding experience several hours, days, or weeks after he had gone through it, his prior insistence that the procedure did not constitute torture may have actually been bolstered. The same could be true for the military interrogators who undergo the same procedures they utilize on detainees. “What we try to indicate here is that [prior experience] doesn’t help close the empathy gap, and we have reason to believe it probably makes it worse,” Nordgren explains. “Because now the interrogator has no more visceral memory for that experience. All they know is that they lived through it.”

So is torturing people—and then immediately surveying their assessment of the experience—the only way to accurately define what constitutes torture? Nordgren assures us that such an impractical interpretation of his research is not his intention. “The point that we make is that the legal standard for defining torture is psychologically untenable,” he says. “We’re identifying the nature of the bias created by empathy gaps, which suggests the need for a more restrictive policy when defining torture. If you’re skiing and you see a red line and it says ‘cliff,’ that doesn’t mean that you should ski as close to the line as possible without going over. It means this is an area you should steer well clear of.”

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And they are not just grinning a bit. Guilt is so often linked with pleasure that research by Kelly Goldsmith, an assistant professor of marketing at the Kellogg School of Management, shows that making people feel the slightest bit guilty amplifies whatever pleasure they subsequently indulge.

Goldsmith and her then–doctoral advisor Ravi Dhar, a professor at Yale, first thought to study the link when a co-worker mentioned how she had just joined Weight Watchers. “She said, ‘Gosh, why does everything just taste better when you’re on a diet?’, ” Goldsmith recalls. “That got me and my advisor talking. Does stuff actually taste better when you’re on a diet? Does stuff taste better when you feel guilty eating it?”

It seems like such an obvious connection—after all, they are not called “guilty pleasures” for nothing—but testing it experimentally is another question entirely. Goldsmith and Dhar, along with Eunice Kim Cho, a postdoc at the University of Toronto, set up a series of five experiments to make certain it was guilt that enhanced pleasure and not some other associated emotion.

Sifting Through Emotions
Their first study tested participants’ affinity for a chocolate that they were told was being test-marketed (which it was, so the participants were not familiar with it). But before they could taste the candy, they were semantically primed, a technique widely used by social psychologists to activate concepts and emotions. In this study, half of the participants were given jumbled sentences loaded with words meant to induce guilt—words like remorse, sin, jury, and error—while the others were given neutral, innocuous words. Once they completed that task, the participants were given the chocolate and asked to rate it on a seven-point scale and state how much they would be willing to pay for it. Three days later, Goldsmith and her colleagues followed up with the participants, again asking them to rate the candy.

Lo and behold, participants who had been primed for guilt both liked the candy more and said they would be willing to pay more for it than those primed with neutral words. Guilt also made the initial pleasurable reaction last longer—the guilt-primed participants remembered liking the candies more than neutral-primed participants.

Since guilty pleasure is often associated with dieting, Goldsmith and her colleagues ran another study, this time priming female participants by showing half of them covers of health-related magazines like Nutrition and the other half covers of neutral magazines like Shutterbug. The participants then wrote a short paragraph about why that magazine is popular. Once primed, they were asked to imagine that they were participating in a chocolate taste-test and were asked how guilty they would feel if they were actually consuming the candy bar. Participants who had been shown the health-related magazine covers reported feeling guiltier than those who had been primed with neutral magazines, illustrating the link between health goals and guilt. Another group was then primed with the same task. Participants who read the health-related magazines reported enjoying the chocolate more.

In a third study, Goldsmith and her colleagues wanted to see if guilt was the only negative emotion that could enhance pleasure. Participants were split into three groups this time—neutral, guilt, and disgust. The latter two groups were asked to describe several instances where they felt either guilty or disgusted. Afterward, everyone participated in the same taste test as in the first study. Guilt-primed participants reported liking the chocolate more than those in the neutral or disgusted prime. In fact, the neutral and disgusted groups reported liking the chocolate the same amount, suggesting that feeling a negative emotion other than guilt did not affect their impression of the candy either positively or negatively.

A fourth study used sentence scrambles like those in the first study to prime participants, who then had to complete word fragments, like E N _ _ _. Participants who were in the neutral prime condition tended to fill in the blanks so the words were similarly neutral, like E N T E R. But participants who had been primed to feel guilty tended toward words with more pleasurable connotations, like E N J O Y.

A final study explored guilty pleasures beyond food-related indulgences. Female participants were again primed with sentence scrambles, but instead of participating in a taste test they were asked to view dating profiles from a website. After viewing five male profiles, they were asked to rate how much they had enjoyed viewing the profiles on a 100-point scale. They were also asked, “Are you more interested in online dating now than before you started this study?” Once more, participants in the guilt prime reported enjoying the profiles more and were more interested in dating than those in the neutral prime condition.

The Guilt Connection
Neither Goldsmith nor her colleagues were surprised by the consistency of these results. “Guilt is linked with pleasure because often times when we experience guilt, we experience pleasure,” Goldsmith says. “I think for a lot of people these cognitive associations can form just based on what we called repeated coactivation. When pleasure’s activated, guilt is activated, and so in our brains, over time, those two become connected.”

But not all guilt is equal. Some experiences are more intense than others and may not enhance pleasure. Pretend a student has tickets to see a concert, Goldsmith suggests. If the student has to skip a homework assignment to go, he may feel a bit guilty, which could lead to a more enjoyable experience at the concert. But if the student’s grandmother passed away, the guilt from attending the concert as opposed to spending time with family would be overwhelming. The effect might not be the same as merely skipping a homework assignment.

Still, at mild intensities guilt can be a powerful motivating force. Take marketing to consumers, for example. “There’s so much push to take the guilt out of advertising and take the guilt out of products,” Goldsmith remarks. “If stripping all the guilt out of things makes them taste worse, are people going to buy them again? And there is something to be said for people having the best experiences possible. If you’re indulging in a chocolate dessert anyways, it might as well be one you enjoy,” she adds. “The implications for marketers, especially of these more indulgent or hedonic products like spa treatments or chocolates or online dating sites, might be just let people feel guilty doing it.”

Policy makers should take note, too, Goldsmith says. Guilt is commonly used to steer kids away from drugs and alcohol, but the results of these studies suggest that may have the opposite effect from what is intended. “It cuts both ways,” Goldsmith says. “Guilt can both be a vehicle to make safe indulgences more fun and more enjoyable for all of us. But then on the flip side we don’t want to make behaviors that we’re trying to curtail more sexy and more enjoyable.”

That sober message may have made you feel a bit guilty. Go eat a candy bar. Trust me, you’ll enjoy it.

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This type of provocation has a long and continuing history. In 1919, for example, Irish-American “athletic clubs” in Chicago created disturbances that caused widespread rioting between the Irish-American and African-American communities that already viewed each other with suspicion. And within the past year, attacks on institutions in Iraq have plainly had the goal of persuading the departing American troops to stay, fomenting more conflict.

The ability of provocative actions by extremists to manipulate international conflicts has received little attention from researchers in the past. But now a study by Sandeep Baliga, an associate professor of managerial economics and decision sciences at the Kellogg School of Management, and Tomas Sjöström, a professor at Rutgers University, outlines why those actions have their impact and what circumstances determine the results of their manipulations. It also shows why extremism and terrorism are in no one’s best interests.

Subtlety and Stealth
Provocateurs obtain their goals by subtlety and stealth, Baliga and Sjöström show. “People often think that extremists want to stimulate the withdrawal of their antagonists directly through their provocative acts,” Baliga explains. “But our message is the complete reverse. They want to suck you into a bigger fight, which then forces you to withdraw. They don’t expect you to withdraw after their one puny attack.”

Furthermore, the strategy of provocation depends on political preferences of the individual, government, or other organization that they target.

Those results stem from the application of basic mathematics. “Our paper uses game theory methodically to study a topic in international security and politics,” Baliga explains. “And judged purely as a game theory exercise we hope the analysis is subtle and interesting. It’s basically a new game that introduces an outsider—the provocateur who attempts to influence a game played by other players.”

Baliga and Sjöström based their study on a game that they developed in 2000 and published in 2004, which was inspired by Nobel Laureate Thomas Schelling’s concept of “the reciprocal fear of surprise attack.” In Schelling’s metaphor for conflict, a homeowner who has heard a noise at night grabs a gun and walks downstairs, where he confronts an armed burglar. Neither protagonist wants a gunfight, but both suspect that the other might fire first—or think that his antagonist believes he will fire first. “Each becomes aggressive because they fear the other party’s aggression. In game theory, we say their actions are ‘strategic complements’,” Baliga explains. Those fears can prevent the nonviolent outcome that both prefer.

In their game, Baliga and Sjöström applied that thinking to nations and analyzed whether two belligerent countries in a similar position can calm themselves down by talking before fighting breaks out. “We showed that you could escape violence,” Baliga says. “That’s surprising because you have huge incentives to bluff, pretend you’re nice, and take advantage of the other side by lulling them into a false sense of security. This incentive to bluff prevents fully truthful communication from occurring. But we showed that enough communication can occur to get out of it.”

Extending the Game
Baliga and Sjöström’s extension of their game to include provocateurs came out of discussions about the events of September 11 and the Iraq war. In November 2008, a fresh incident brought extremist provocation further into focus. A “terrorist attack in Mumbai raised tensions at a time when Pakistani President Zardari wanted improved relations with India,” Baliga and Sjöström write in their paper. “ISI-sponsored militants seem to deliberately inflame the conflict between Pakistan and India, partly because India is seen as an implacable foe, but also because the conflict relieves the pressure on extremists supported by the ISI.”

To model their new game, the two researchers imagined an extremist sending a public message to two countries involved in a tense standoff. The extremist could be either a hawkish provocateur or a dovish pacifist who seeks to influence the action of one of the players. A hawkish extremist, such as the ISI, seeks an aggressive action by one of the players, such as the leader of Pakistan. Examples include a build-up of weapons or movement of troops to a contested territory. A dovish extremist, such as the United Kingdom’s Campaign for Nuclear Disarmament, seeks a conciliatory action, such as the pursuit of peace negotiations.

The model developed by Baliga and Sjöström predicts how the preferences of the player whom the extremists try to influence affect the success or failure of the manipulation. A hawkish provocateur wants the targeted government leader to react to a provocative act by acting in a hawkish way—moving troops to a border, for example—for fear that the perceived enemy will be doing the same. A dovish extremist instead wants the targeted leader to tamp down tensions—withdrawing from the border, for example, believing the other side is doing the same.

Dovish, But Not Too Dovish
The model shows that a hawkish extremist will employ provocation only on a leader who is relatively dovish. Why? A hawkish leader is a “hawkish extremist sympathizer” and will take aggressive actions anyway. There is no need for the extremist to influence him and warn the other side of impending action. And a very dovish leader will not make any aggressive move even if the other side is aggressive, so provocation will backfire. In both these cases, provocation is counterproductive. Therefore, Baliga explains, “You should expect to see provocation by hawkish extremists when the player they’re really trying to influence is dovish, but not so dovish that he won’t respond to aggression by antagonists without aggression.”

According to Baliga, the strategy of Pakistan’s secret service exemplifies that point. To manipulate the democratically elected Pakistani leader, who wants to take a dovish approach to India, the ISI works to antagonize India. When India responds, the Pakistani leader feels obliged to take an equally aggressive stance. But before the Pakistani army attack on India at the Kashmiri district of Kargil in 1999, there was no terrorist activity. In that case, the ISI knew the army was going to take the action they would have advocated anyway, so there was no need to provoke India.

This means even the absence of provocation provides information in the same way as the dog that did not bark in the Sherlock Holmes story Silver Blaze; it would reveal that the leader is not particularly weak and, on balance, might be more likely to be hawkish. So, even a hawkish leader suffers from the possibility of hawkish extremist action.

The model also shows that dovish extremists cannot dampen tensions. If a dovish extremist sends a message that his country’s leader is pacifist only when he truly is a pacifist, then the other side might back down. Yet if such a message would work, the dovish extremist would also send it when his leader is strong, because at least it gets one of the sides to back down. But if that message is sent under false pretenses, the dovish extremist’s credibility would suffer. No one would believe his message and tensions would not be reduced.

Baliga states the ultimate message from the study. “Dovish extremist action cannot work and hawkish extremist behavior makes everybody worse off all the time,” he says. “Both players, even if their preferences are aligned with the hawkish extremists, would love to kill off extremism. That would make the world a better place. The power of provocation lies in our response to it. If you could completely ignore the provocateurs, their ability to strike fear would die. The tricky thing is that both sides have to ignore provocation.”

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