Policy Strategy Jun 19, 2017

Is an Unpre­dictable Leader Good for Nation­al Security?

Think the goal is to keep your ene­mies guess­ing? Game the­o­ry sug­gests otherwise.

Zaphodbeeblebroxv

Based on insights from

Sandeep Baliga

Is unpre­dictabil­i­ty a virtue or a hin­drance in the realm of nation­al security? 

Since the elec­tion of Don­ald Trump, inquir­ing minds want to know. Some polit­i­cal com­men­ta­tors view volatil­i­ty as an asset. This line of argu­ment tends to invoke Richard Nixon’s mad­man the­o­ry” of inter­na­tion­al rela­tions, accord­ing to which adver­saries are more cau­tious sim­ply because they are wor­ried about the impul­sive­ness of a U.S. president.

But Sandeep Bali­ga, a pro­fes­sor of man­age­r­i­al eco­nom­ics and deci­sion sci­ences at the Kel­logg School, takes a dif­fer­ent view. In his research, Bali­ga applies game the­o­ry to study issues in inter­na­tion­al rela­tions. Using this mod­el, he has found that metic­u­lous strat­e­gy, not volatil­i­ty, is ulti­mate­ly the best approach.

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Nation­al secu­ri­ty always involves a com­plex set of games,” Bali­ga says. It’s not just about act­ing tough or keep­ing oth­ers on their toes. You have to track the log­i­cal con­clu­sions of your assump­tions, out­line those assump­tions care­ful­ly, and deduce the con­clu­sions in a rig­or­ous way. That’s how you avoid mistakes.”

No Sin­gle Model

In zero-sum games like pok­er, it can pay to be unpre­dictable — even strate­gi­cal­ly ran­dom. If a player’s bluff­ing becomes appar­ent to the oth­er play­ers, his bluff will be called and he will not win.

But inter­na­tion­al rela­tions is not a zero-sum game. In the lan­guage of game the­o­rists, war leads inevitably to sur­plus destruc­tion,” which essen­tial­ly means less to go around for every­one. Nations thus often have a clear incen­tive to trade with one anoth­er, and coor­di­nate on peace efforts, rather than appro­pri­ate one another’s resources by engag­ing in a cost­ly and uncer­tain war. 

Ulti­mate­ly, an effec­tive nation­al secu­ri­ty pol­i­cy is one that accounts for these com­plex­i­ties and enter­tains a wide range of vari­ables and out­comes. There’s no sin­gle mod­el of the world that works all the time,” Bali­ga says. Act­ing tough might work in some cas­es, but it might back­fire in oth­ers. So before decid­ing on a pol­i­cy, lead­ers should first deter­mine what kind of sit­u­a­tion they face.”

Take the U.S. response to Al Qae­da and ISIS over the past two decades. As Bali­ga sees it, Al Qae­da was engaged in asym­met­ric war­fare” with the goal of pro­vok­ing the U.S. into a larg­er mil­i­tary con­flict, there­by win­ning broad­er sup­port from mod­er­ate Mus­lims around the world. 

This exam­ple sug­gests that a nation­al secu­ri­ty strat­e­gy must account for the pos­si­bil­i­ty that an aggres­sive mil­i­tary inter­ven­tion might actu­al­ly end up rad­i­cal­iz­ing a pop­u­la­tion rather than elim­i­nat­ing terrorism.

In nation­al secu­ri­ty, pre­dictabil­i­ty can def­i­nite­ly pay.” 

ISIS, on the oth­er hand — com­prised as it is of Sun­ni mili­tias that emerged from Iraq’s dis­in­te­gra­tion — has been fight­ing a more tra­di­tion­al war. At least in the begin­ning, they were act­ing more like an army, and it wasn’t in their strate­gic inter­est to pro­voke the U.S.,” Bali­ga says. 

But by rad­i­cal­iz­ing young peo­ple and inspir­ing ter­ror attacks with its pro­pa­gan­da, ISIS may have mis­cal­cu­lat­ed, vir­tu­al­ly guar­an­tee­ing U.S. mil­i­tary involve­ment. And now that it is on its heels, ISIS might be adopt­ing a strat­e­gy of provo­ca­tion sim­i­lar to the one that char­ac­ter­ized Al Qaeda. 

From the U.S. per­spec­tive, Bali­ga points out, these are two dif­fer­ent games. One is a game of esca­la­tion; the oth­er is a game of deter­rence.” Rec­og­niz­ing this is crit­i­cal, because each requires a dif­fer­ent response. 

Your opti­mal strat­e­gy should take into account what you know or don’t know about the game you’re play­ing,” he says. 

Who Wants a Madman?

So is there truth to the effec­tive­ness of the mad­man” the­o­ry of inter­na­tion­al relations? 

For the most part, Baliga’s answer is no.” To explain why, he points to the work of Thomas Schelling, an econ­o­mist and Nobel lau­re­ate who used game the­o­ry to study approach­es to nuclear deter­rence dur­ing the height of the Cold War. 

Schelling pro­mot­ed the impor­tance of rep­u­ta­tion as a use­ful deter­rent. But while Richard Nixon believed that a rep­u­ta­tion for unpre­dictabil­i­ty was the most effec­tive deter­rent, Schelling knew that con­sis­tent behav­ior was more effec­tive. If your oppo­nents believe you will keep your word, then your word can shape their actions. 

As Bali­ga puts it: in nation­al secu­ri­ty, pre­dictabil­i­ty can def­i­nite­ly pay.” 

Schelling’s approach pio­neered the prin­ci­pal – agent” prob­lem, where a prin­ci­pal” finds her­self depen­dent upon — and need­ing to incen­tivize — an agent” whose inter­ests may not align with her own. In a clas­sic exam­ple, an employ­er might incen­tivize an employ­ee to be pro­duc­tive by link­ing his salary to out­puts such as sales. If the employ­ee believes the employ­er will renege on pay­ing him, or that her pay­ment is ran­dom and inde­pen­dent of per­for­mance — the mad­man the­o­ry of pay?” Bali­ga asks — there is no incen­tive for him to work.

The same dynam­ic holds when the prin­ci­pal is the Unit­ed States and the agent is North Korea. In this case, the U.S. wants to influ­ence North Korea’s deci­sion-mak­ing by link­ing it to out­puts such as the de-accel­er­a­tion of North Korea’s nuclear arms pro­gram. If North Korea is left with­out a clear sense of how the U.S. might respond to aggres­sion or appease­ment, its lead­ers might choose a more reck­less and desta­bi­liz­ing course of action. After all, Bali­ga points out, it has not gone unno­ticed in North Korea that the end of Libya’s nuclear pro­gram led even­tu­al­ly to Muam­mar Gaddafi’s death — not his per­ma­nent accep­tance into the inter­na­tion­al community. 

In oth­er words, an agent is more like­ly to be swayed if he believes the prin­ci­pal will abide by any agree­ment the two par­ties reach. There­fore, it is impor­tant for a prin­ci­pal to cul­ti­vate a rep­u­ta­tion for fol­low­ing through on poli­cies designed to incen­tivize the actions of even unsa­vory agents. 

If you are a tru­ly mad leader, why would any­one change their behav­ior as a func­tion of what you do? If they know you might do some­thing crazy whether they do some­thing you like or not, they might just say the hell with it, I’ll do what­ev­er I want.’ The mad­man’ actu­al­ly has to be clever, doing some­thing crazy if you don’t do what he wants and being accom­mo­dat­ing if you do. In that case, well, he’s no longer mad.”

The under­ly­ing log­ic for design­ing incen­tives is sim­i­lar in the employ­er – employ­ee and the U.S – North Korea ver­sions of the prin­ci­pal – agent mod­el, says Bali­ga. But there is one key dif­fer­ence: In a busi­ness trans­ac­tion, a con­tract enforced by a pow­er­ful court sys­tem can make a prin­ci­pal behave, mak­ing a rep­u­ta­tion for trust­wor­thi­ness slight­ly less impor­tant. In inter­na­tion­al affairs, on the oth­er hand, there is no com­pa­ra­ble, effi­cient enforce­ment mechanism.

So a rep­u­ta­tion for trust­wor­thi­ness is all the more impor­tant,” says Baliga.

Featured Faculty

Sandeep Baliga

John L. and Helen Kellogg Professor; Professor of Managerial Economics & Decision Sciences

About the Writer

Drew Calvert is a freelance writer based in Iowa City.

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