Madness can be wickedly rational

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Thomas C. Schelling on why international terrorism is so rare

HT: http://marginalrevolution.com/marginalrevolution/2015/01/thomas-c-schelling-on-why-international-terrorism-is-so-rare.html

Armistice Day: World War I as a bar fight

Wars are like bar fights. Both are about not backing down. David Friedman explains:

Consider a barroom quarrel that starts with two customers arguing about baseball teams and ends with one dead and the other standing there with a knife in his hand and a dazed expression on his face.

Seen from one standpoint, this is a clear example of irrational and therefore uneconomic behaviour; the killer regrets what he has done as soon as he does it, so he obviously cannot have acted to maximize his own welfare.

Seen from another standpoint, it is the working out of a rational commitment to irrational action–the equivalent, on a small scale, of a doomsday machine going off.

Suppose I am strong, fierce, and known to have a short temper with people who do not do what I want.

I benefit from that reputation; people are careful not to do things that offend me. Actually beating someone up is expensive; he may fight back, and I may get arrested for assault. But if my reputation is bad enough, I may not have to beat anyone up.

To maintain that reputation, I train myself to be short-tempered. I tell myself, and others, that I am a real he-man, and he-men don’t let other people push them around. I gradually expand my definition of “push me around” until it is equivalent to “don’t do what I want.”

We usually describe this as an aggressive personality, but it may make just as much sense to think of it as a deliberate strategy rationally adopted.

Once the strategy is in place, I am no longer free to choose the optimal response in each situation; I have invested too much in my own self-image to be able to back down… Not backing down once deterrence has failed may be irrational, but putting yourself in a situation where you cannot back down is not.

Most of the time I get my own way; once in a while I have to pay for it.

I have no monopoly on my strategy; there are other short-tempered people in the world. I get into a conversation in a bar. The other guy fails to show adequate deference to my opinions. I start pushing. He pushes back. When it is over, one of us is dead.

No-one could back down in 1914. Tom Schelling even said that once a country mobilised for war in 1914, it had no plans at hand on how to stop this mobilisation.

Schelling spent a lot of time on going to war as an emergent process: what a nation does today in a crisis affects what it can be expected to do tomorrow:

A government never knows just how committed it is to action until the occasion when its commitment is challenged.

Schelling argues that nations, like people, are continually engaged in demonstrations of resolve, tests of nerve, and explorations for understandings and many misunderstandings.

That is why there is a genuine risk of major war not from accidents in the military machine but through a diplomatic process of commitment and escalation that is itself unpredictable.

In Schelling’s view, many wars including World War 1 were products of mutual alarm and unpredictable tests of will.

Schelling and others in the 1950s and after studied World War 1 to learn how to not blunder into wars when nuclear weapons now would be used.

When people discuss the futility of World War 1, they under rate the role of unintended consequences and the dark side of human rationality in situations involving collective action.

Wars arise as unintended consequences of mutual alarm and unpredictable tests of will. As such, they are not moral ventures that you can choose to join or not. People blunder into wars.

It is even harder to get out of a war than into one. The problem is credible assurances that the peace is lasting rather than just a chance for the other side to rebuild and come back to attack from a stronger position.

A state would think that another state’s promise not to start another war is credible only if the other state would be better off by keeping such promises not to start another war than by breaking its promise once it has rearmed.

Making sure that Germany and its allies did not restart the war a few years later, fed and rested, is why the peace treaty in 1919 totally disarmed Germany and split-up the other Axis powers.

One side will think that the other’s promise not to re-start a war is credible only if the other state would be better off by keeping its promise not to re-start a war than by breaking its promise.

France fortified its border with Germany in the 1920s because of a lack of trust that the peace would endure. Germany was disarmed after 1918 so that the day which it would be a threat again was well into the future.

An understudied issue is peace feelers in World War 1 such as by the German chancellor in 1916 and the Reichstag peace resolution on 19 July 1917. Pope Benedict XV tried to mediate with his Peace Note of August 1917.

Peace initiatives failed because until the last months of the war, neither side really lost confidence that they could prevail over their opponents.

Both sides suffered from a profound sense of insecurity in an international system characterised by uncertainty, arms races, warfare, and constant intrigue.

Both sides assumed the worst of the other; both trusted in the reduction of their opponents’ military power to keep them safe. As long one side could believe that they had a plausible chance to prevail on the battlefield, they would not abandon their quest to achieve that goal.

From late 1914 to early 1917, the Allies thought the balance of power favoured them because they had access to greater resources than the Central Powers.

German peace feelers when they were winning were based on Germany keeping everything it had conquered up till then. When Germany was in retreat, the German peace feelers were based on going back to the old borders before the war.

Map of Europe at the end of 1916

With its armies in possession of enemy territory in both the east and west, and the Allies unable to push them out, German leaders saw no reason to offer extensive concessions for peace.

HT: Ross A. Kennedy,

The value of a statistical life through time in the USA

Thomas Schelling’s crucial contribution in 1968 at RAND was the notion of statistical lives—mortality risks—in  contrast to valuing the lives of specific, identified individuals. His insight was that economists could evade the moral thicket of valuing life and instead focus on people’s willingness to trade-off money for small reductions in the risks they face.

Si vies pacem, para bellum

The Roman maxim ‘If you want peace, prepare for war’ is about the power of credible commitments in avoiding a violent form of bargaining called war. If you look threatening – have a great power to hurt – you can compel people to do what you want, which includes not attack you. Threats are cheap especially when you do not have to carry them out. You get what you want without any fighting.

Those that show the greatest credible prior commitment – those that burn their bridges – extract much more from bargaining that those that have options to fall back on. People fear cornered opponents.

Who picks a fight with someone who looks crazy or cannot back down? Who picks a fight with someone who carries himself or herself like a seasoned bar fighter?

As explained by David Friedman:

“Consider a bar room quarrel that starts with two customers arguing about baseball teams and ends with one dead and the other standing there with a knife in his hand and a dazed expression on his face.

Seen from one standpoint, this is a clear example of irrational and therefore uneconomic behaviour; the killer regrets what he has done as soon as he does it, so he obviously cannot have acted to maximize his own welfare.

Seen from another standpoint, it is the working out of a rational commitment to irrational action – the equivalent, on a small scale, of a doomsday machine going off.

Suppose I am strong, fierce, and known to have a short temper with people who do not do what I want. I benefit from that reputation; people are careful not to do things that offend me.

Actually beating someone up is expensive; he may fight back, and I may get arrested for assault. But if my reputation is bad enough, I may not have to beat anyone up.

To maintain that reputation, I train myself to be short-tempered. I tell myself and others that I am a real he-man, and he-men don’t let other people push them around. I gradually expand my definition of “push me around” until it is equivalent to “don’t do what I want.”

We usually describe this as an aggressive personality, but it may make just as much sense to think of it as a deliberate strategy rationally adopted.

Once the strategy is in place, I am no longer free to choose the optimal response in each situation; I have invested too much in my own self-image to be able to back down…

Not backing down once deterrence has failed may be irrational, but putting yourself in a situation where you cannot back down is not. Most of the time I get my own way; once in a while I have to pay for it.

I have no monopoly on my strategy; there are other short-tempered people in the world.

I get into a conversation in a bar. The other guy fails to show adequate deference to my opinions.

I start pushing. He pushes back. When it is over, one of us is dead.”

Tom Schelling’s fellow Nobel Prize winning game theorist Robert Aumann argued well that the way to peace is like bargaining in a medieval bazaar. Never look too keen, and bargain long and hard, for otherwise people will take great advantage of you! But again to quote Schelling:

“A government never knows just how committed it is to action until the occasion when its commitment is challenged.

Nations, like people, are continually engaged in demonstrations of resolve, tests of nerve, and explorations for understandings and misunderstandings…

This is why there is a genuine risk of major war not from ‘accidents’ in the military machine but through a diplomatic process of commitment that is itself unpredictable.”

That is why there was World War I. A state also can be tempted to start a war now to avoid having to deal with a stronger opponent in the future. That is why Britain and France declared war on Germany in 1939.

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