DuhEconomics: Game Theory at work

'He says some Singaporeans want a more open, multi-party system.

'Mr Lee says the opposition parties are capitalising on this by asking for their votes, not because of their abilities or policies, but because then, the opposition would exist.

'But he questioned if this would make things better for Singapore.

'Mr Lee says: "What is the opposition's job? It's not to help the PAP do a better job ... because if they help the PAP do a better job, you're going to vote for me again and they're going to be out of a job for a long time. So their job is to make life miserable for me.

'"Right now we have Low Thia Khiang, Chiam See Tong, Steve Chia. We can deal with them. Suppose you had 10, 15, 20 opposition members in Parliament. Instead of spending my time thinking what is the right policy for Singapore ..." - CNA.com

If you think i'm gonna make a political comment regarding this political comment, then i'm sorry to say that you are wrong... Actually, i'm going to say something that's completely pointless to you but v interesting for me, like how this shows Game Theory at work...

There's a concept in Game Theory called Backward Induction(BI), which basically means that when making decisions, the person will compare the expected payoff he'll get from different decision by working backwards frm the last stage. This comment is really exciting for me becos i've never seen a more concrete illustration of BI in reality.

To begin with, we see that there are roughly 4 stages:

Stage 1: Mr Lee decides whether he prefers little opposition or a lot of opposition in parliament. Presumably he can act in such a way to make his decision come to pass.

Stage 2: Opposition responds by behaving in an utility-maximising way, whether they get elected or not.

Stage 3: Mr Lee makes policy given this amount of opposition and their behaviour.

Stage 4: Public responds to the policy by the next election.

Using BI, we can see that:

Stage 4: If public re-elects his team, Mr Lee is happy, if not he will be sad.. So he prefers to be re-elected.

Stage 3: If he makes good policies, public will be more likely to re-elect him. If he makes crappy policies, Chee Soon Juan may become next PM.. =/ Anw, so he will prefer to make good policies.

Stage 2: If there are a lot of opposition in parliament, they will be bolder may plaster Steve Chia photos everywhere, making it distracting and difficult for Mr Lee to make good policy. If there are few opposition MPs, they wont try too many funny things.

Stage 1: Given that Mr Lee wants to get re-elected, so he wants to make good policies, so he dont want to see too many Steve Chia photos, he will prefer less opposition in parliament.

Tada! The amazing power of duheconomics!

Tags:
duheconomics, duhpolitics, singaporeelections, duheconomist