The Predictioneer’s Game: Using the Logic of Brazen Self-Interest to See and Shape the Future

by Bruce Bueno De Mesquita

  By now you are probably thinking, Sure, people can fill in numbers to the questions, but it’s just guesswork. Ask two experts the same question and you’ll get two different answers. Guess what—that’s not true. If it were, then there is barely any chance that a model like mine could achieve any consistent accuracy. There would be too much luck involved. In fact, the CIA has checked out the risk that different experts give greatly different answers leading to greatly different predictions. They found little variation in the predictive results from the sort of modeling I do, even when the people asked had dramatically different access to information. Academic experts, for instance, generally do not know the classified information that intelligence analysts have access to. Yet both groups tend to provide data so similar, wherever it’s from, that the results hardly change when moving across these experts. Even more surprisingly, the answers often don’t change much when the inputs for the computer model are put together by undergraduate students with no expertise at all.

  Once I was teaching an undergraduate class at the University of Rochester while also investigating how best to get Ferdinand Marcos to resign as head of the Philippine government and create an atmosphere ripe for a free election in that country. William Casey, then Ronald Reagan’s director of intelligence, asked me to study this problem, and I was locked in a (cold) lead-lined vault at CIA headquarters to do it. I had access to classified information, but was not even allowed to read my own report when it was finished. The report was for the eyes of only the president, the vice president, the secretaries of state and defense, the national security adviser, and a few others. Meanwhile, my students worked on the same problem and were given access to the computer program I had developed to help solve such problems. They extracted the required information from magazines such as The Economist and newspapers such as The New York Times and fed their data into the computer. Ninety percent of them arrived at the same conclusions I reached in the lead-lined vault, and those conclusions about strategy proved to work rather well. This should tell us that the information needed to make good predictions is not terribly exotic; it does not require years of learning some other country’s language, history, and culture, although all of that is a big help. It should also tell us that a lot of classified information is easily reproduced from open, public sources for those who are willing to work at it.

  Now that we have an idea of where and how to find our information, working out how to get what any given player wants is the key to generating predictions, and ultimately to engineering outcomes. Since everyone involved in a given problem is concerned with getting what they want, their behavior and choices are predictable. Each and every one of them will act so as to lead to the attainable outcome that is closest to what they want, given what they believe about the situation.

  What might people’s goals be in a generic sense? Whatever the specific issue, I always operate under the assumption that everyone wants two things when making a decision (although different people weight those two things differently). One thing they want is a decision that is as close as possible to the choice they advocate. The second thing they want is glory—the ego satisfaction that comes from the recognition by others that they played an important part in putting a deal together.

  Some people care so much about getting credit for putting an agreement together that they’re willing to shift their position dramatically if that will help promote a deal. Others prefer to go down in a blaze of glory, backing a losing position rather than making concessions that would make a deal feasible. Everyone shares these two goals: get their preferred outcome, and get credit for any outcome. Different people value one or the other differently, and so they’re willing to trade away returns on one dimension to get better returns on the other.

  Let’s return to the North Koreans. After interviewing experts and compiling research, we know three important pieces of information about each player: what they say they want, how much they care, and how influential they can be. In the case of North Korea, the range of policy choices is depicted in figure 4.1, both in terms of substantive meaning and numerical value. (One easy way to get numbers out of policy stances is to ask experts to make marks on a line for several policy options, emphasizing that they should be spaced to reflect how close or distant the choices are substantively from each other. Then a ruler can be used to measure the distances, and voilà, a simple numeric scale has been created.)

  My 2004 study of North Korea identified more than fifty players in this complicated international game. Two, Kim Jong Il and George W. Bush, had a veto, which meant that no deal could be struck without their support. Kim Jong Il’s preferred position was to agree to a deal but to structure it so that he could cheat later, reneging on his promises (10 on the scale). According to the experts, Bush wanted the unconditional elimination of North Korea’s nuclear program (100 on the scale). Without some strategizing, then, the two sides were unlikely to reach agreement, since the two most important decision makers were miles apart and both were thought to be reluctant compromisers. Yet a first approximation of the likely outcome suggested strong support for a consequential reduction in North Korea’s nuclear capabilities accompanied by significant U.S. concessions, including security guarantees for North Korea and considerable foreign economic assistance. How did I arrive at that inference?

  FIG. 4.1. North Korean Issue

  The information collected about each player in the North Korea game—their position on the issue, their salience for the issue, and the clout they could bring to bear—allows us to see how much power there is behind each possible outcome. Potential influence, one of the three pieces of information, tells us how persuasive each player could be, but not how persuasive each is. That depends on their willingness to apply their influence to the problem, and that in turn is determined by how salient the issue is. So we can define a player’s power—the pressure they really exert to shape the outcome—as equal to their influence multiplied by their salience.

  Using that information, we can formulate the first of two pretty reliable first cuts at a forecast (ignoring vetoes for now). Figure 4.2, on the next page, shows the distribution of power in support of each of the major policy stances on the issue scale. Think of it as showing how much power backs each option. It is like a map of mountainous terrain, with the positions garnering the most powerful support forming high, prominent peaks, and the positions with little support amounting to not much more than molehills. This picture of the power terrain is based on the answers to the questions posed to the experts about position, salience, and potential influence.

  We can extract two insights from figure 4.2 that can help us predict if we are looking at a purely international political decision (which we are not). First, there really isn’t that much clout supporting North Korea’s nuclear program. None of the positions that favor North Korea’s keeping a nuclear program are backed by a really large amount of power. Second, piling the mountains of power one on top of the other as we move across the spectrum of choices, we discover that the pile does not reach a majority of all the power until we get to the position designated as “Eliminate Nuclear Programs / U.S. Concessions.”

  Since we are continuing to assume, as we did back in Game Theory 101, that stakeholders prefer positions closer to their own to positions farther away, our first first-cut prediction is “Eliminate Nuclear Programs / U.S. Concessions.” Why? Because if it takes a majority of power to enforce an outcome, then the winning position is the one for which the total of power to the left of it is less than 50 percent and the total of power to the right of it is also less than 50 percent. The only position for which that is true is “Eliminate Nuclear Program / U.S. Concessions.”2

  FIG. 4.2. The North Korean Nuclear Power Landscape

  This prediction has some important limitations. For one thing, it ignores vetoes. Since it is not even close to Kim Jong Il’s desired outcome (and is not all that close to the United States position either), we can be confident that North Korea wil
l reject it unless there is sufficient political pressure on Kim Jong Il to get him to change his position. So we see we really must think through not only the international aspects of the issue but also the domestic dynamics in North Korea. To be sure, we need to work out whether it is possible for foreign stakeholders (like the U.S. president or the South Korean president) to change Kim’s mind. But we also have to analyze the internal political pressure Kim might face if he resists or if he concedes the proposed solution by outsiders. These are some of the things my computer model does that are difficult to do in our heads.

  We can look back at the information we collected from experts and assemble a second preliminary prediction. Again we will have to be mindful that we are ignoring the possibility of vetoes for the moment, as well as the dynamics that lead players to alter positions in response to credible threats and promises.

  Rather than just look at the 50 percent break point in the power landscape, we can apply a different method to arrive at a sensible preliminary prediction. Let’s multiply the influence of each player (calling influence I) by his or her salience (S) and multiply that result by the numerical value of the position each player advocates (P), then add those totals up for all of the players and divide that total by the sum of the influence times salience for each of the players (sum of I x S x P)/(sum of I x S). Now we have computed a value called a weighted mean. This is, roughly speaking, an average of what people, with their influence and commitment to a given issue taken into account, want. With the answer to this calculation in hand—it is 59.8—refer back to figure 4.1. There we see numerical values associated with possible solutions to the issue, and so we can see that 59.8 is equivalent to the position designated as “Slow Reduction, U.S. Grants Diplomatic Recognition.” The details behind the calculation leading to this prediction can be found in the first appendix.3

  Now we have two first-cut ways to predict what is likely to happen. Taking the two together, we can be fairly confident (still ignoring vetoes) that the solution to North Korea’s nuclear problem lies somewhere between the initial, majority-power approximation (about 80 on the issue scale in figure 4.1) and the weighted mean position (60 on the issue scale). That easily, we have created pretty reliable initial forecasts for this issue—a narrow range within which a resolution is likely to be found if no one exercises a veto. The initial forecasts mean substantively that at the outset there was a possible resolution supporting a slow reduction in North Korea’s nuclear capability followed by U.S. diplomatic recognition of the Democratic People’s Republic of Korea. I will say more about that in a moment.

  The really simple power-majority view coupled with the slightly more complicated weighted-mean view offers a good answer to the range of likely agreements, but they do not result in the best prediction possible. That takes a computer program to calculate the solution to a game in which players make policy proposals and try to exploit each other’s egos to alter stances, climb over or reshape the mountains of power that lie in their way, and get the outcome they want. Still and all, there’s now enough information to make a pretty reliable prediction. This baseline forecast is likely to be right around 70 to 75 percent of the time.4

  Take a look back at the hills and valleys in figure 4.2, remembering that we are looking at the lay of the land in 2004. Doing so helps us understand that being really powerful does not assure success. The tallest mountain, the biggest mass of power, supports the idea that North Korea should completely eliminate its nuclear program in exchange for concessions. That mass of power supports an outcome around 80 on the issue scale (figure 4.1). This was not Kim’s point of view, it was not Bush’s point of view, and it also was not the weighted mean power’s point of view. That mean power perspective, located at the position labeled “Some Reduction /U.S. Recognition,” actually had the smallest bloc of power behind it. Although not supported by many, it was nevertheless the position around which an initial compromise might most easily have been constructed. That means that in 2004 one of the first-cut predictions included the prospect that North Korea could be induced to reduce substantially, but not eliminate, its nuclear capability in exchange for significant U.S. concessions, including perhaps even diplomatic recognition and certainly including consequential foreign aid (not shown on the figure).

  Of course, this forecasting method doesn’t tells us how to get Kim Jong Il and President Bush to agree to the position it represents or to some other result that could be successfully negotiated. That’s where game theory comes in. Still, it is interesting to realize that, except for working out how to get Kim and Bush to agree to this result, we now have, with one of our baseline forecasts (and the forecast that ultimately came out of the computer-simulated game), a prediction, made in 2004, that is very close to the actual deal struck between the United States and North Korea in 2007.

  Let’s think now about the game theory side to see the logic that produces a successful result and to get at some of the nuances of that result. For starters, we should notice that although North Korea is often portrayed in the media as a closed society, a mysterious place about which we know very little, the truth is that there are plenty of excellent experts in universities and elsewhere who know a lot about North Korea’s government and its leaders. I interviewed three experts, two together and one separately, and they came up with quite reliable information even though they disagreed about what they thought would happen in the so-called six-nation talks. As I intimated earlier, getting the data is not that hard. The more difficult question is how to frame the issue so that we answer the right question.

  A good approach to solving problems such as presented by North Korea’s nuclear program begins by asking why that country’s leaders would want to develop nuclear weapons in the first place. We can think of that as asking, “What are they really demanding in the international arena?” The superficial answer might be to say that they want to threaten the Republic of Korea or American interests in the Korean peninsula. That may have merit but is unlikely to provide the whole answer, or even the main answer. I believe a good place to examine any provocative policy is to ask how that policy affects the prospects of political survival for the incumbent leadership that is engaging in provocation. Remember, this is human nature we’re talking about.

  Kim Jong Il knows what it takes to retain the loyalty of his military leaders and to keep rivals at bay for years on end. He knows whom to antagonize and whom to placate. He certainly understands that he couldn’t defeat a concerted effort by the United States or South Korean governments to overrun North Korea and overthrow his government. But he also understands that he could raise the price of an invasion sufficiently that such an effort would be too costly to consider. In that case, by building a nuclear weapons capability he diminishes or even eliminates the most significant foreign threat to his political survival, freeing himself to concentrate on managing relations with his military leaders, party elites, family members, and senior civil servants. They, of course, could form various coalitions that might threaten his hold on power. Keeping them happy must be a primary concern for Kim Jong Il.

  If personal political survival is Kim’s main concern—and I believe that this is every leader’s top priority—then it’s likely that there never was an intractable contradiction between his interest in sustaining himself in power and the United States’ interest in eliminating any nuclear threat from North Korea. That means all that we had to do was find a self-enforcing approach that provides real commitments on both sides and advances both the elimination of North Korea’s nuclear threat and external threats to Kim Jong Il’s political survival. That was the strategic problem as I saw it in 2004. My investigations painted a picture of Kim Jong Il as an astute politician whose primary interest in nuclear weapons was as a lifeline to staying in power. Looking at several simulations of his strategic interplay with other powerful North Koreans also made evident to me that he is less monolithic a leader than is sometimes thought in the United States and that he was, and remains
, more open to compromise than is generally assumed. What, in 2004, did I contend such a compromise might look like?

  I concluded that his demand really was “Assure my security against a foreign invasion.” Therefore, the counterdemand had to relate to assuring us that his nuclear threat became moot in exchange for our ensuring his political survival. This meant turning attention away from just threatening Kim to finding a way to make his interests and the international community’s interests compatible. Thinking through his interests as well as the interests of others, it becomes clear that any successful compromise requires that the international community be assured that as long as it does nothing to jeopardize Kim’s political survival, he will do nothing to jeopardize peace on the Korean peninsula or beyond.

  In practical terms this meant that the United States directly, or through third parties, needed to guarantee, and I mean really guarantee, not to invade North Korea. The United States also needed to guarantee a sufficient flow of money—we will call it foreign aid—so that Kim Jong Il’s key domestic backers would be assured of receiving substantial personal, private rewards from him. These rewards include money that could go to their secret bank accounts in return for their political loyalty to him. In return for his assured security and for a steady flow of money, the North Korean regime needed to provide a verifiable means of ensuring that its nuclear weapons program stopped. Assurances of his security would most likely come in two forms: formal, explicit Chinese guarantees to defend North Korea, and public American promises not to attack it. Making these guarantees public is critical, because secret assurances are just cheap talk. They are easily violated without imposing political costs on the guarantor who reneges. As for the assurance of a steady flow of money, we are probably talking about as much as $1 billion per year for as long as Kim Jong Il’s regime survives. That may sound like a lot, but think about how much was spent every day in Iraq for years on end, and at what additional price in American, allied, and Iraqi lives, and you’ll see that $1 billion a year is small potatoes.