The BJP and the Folk Theorem

What do, say, Chandrababu Naidu, Nitish Kumar, Narendra Modi, Prafulla Mahanta, Kim Jong-un, and Donald Trump have in common? Just the one thing: All of them are a game theorist’s delight.

Game theory is the branch of economics that deals with dealmaking via bargaining. Necessarily, that involves the study of strategies.

Hundreds of such strategies — or games — have been analysed by the game theory people. The two “games” that are most relevant for politicians who excel at deal-making are the “Grim Trigger” strategy and the Folk Theorem.

The Grim Trigger strategy involves a single ingredient: Trust. As soon as it is broken, it is lost forever and can never be regained.

Nitish Kumar appears to be the ideal candidate for this one. But at the same time, in his case, political convenience appears to be an acceptable substitute for trust.

Not so, however, for Prakash Karat after he withdrew support to the Congress-led UPA government over the nuclear deal. He broke trust and in the process has decimated the CPM. Yechury wants to rebuild it but it isn’t happening just yet.

The Folk Theorem, on the other hand, depends on patience and foresight, which is a very Narasimha Rao, Manmohan Singh, Atal Bihari Vajpayee quality. When you work through all the maths, it says that anything is possible as long as it is feasible and rational.

These strategies — which many politicians adopt without realising — have been analysed threadbare by game theorists. But laymen keep wondering what politicians are doing.

Grim Trigger

The best exponent of this strategy is Donald Trump. In his 18 months in office there is absolutely no trust he has not broken, for example, his summary dismissal of the G7. It doesn’t help that his main adversary, China, is exactly the same, if not worse.

This strategy requires the game to be a repeated one — as in, say, trade negotiations — but with the option of one of the players telling the other to bu**er off. This is what Trump has done, and is doing, and we are already into a trade war.

The use of this strategy ends badly for everyone because there is no going back. So brace up, put your heads between your knees and hope for the best.

In India, as stated earlier, Nitish Kumar is a perfect practitioner of this strategy. He has used it twice — defecting successively between the NDA-UPA-NDA. No one trusts him any longer.

Lalu Prasad, on the contrary, is the exact opposite. Never having used the trigger, he has always played a fully cooperative game with parties that are not overtly anti-Muslim.

That brings us to Narendra Modi. If all his allies can be taken to be the “other player”, Mr Modi used the trigger long ago.

His “defection”, as the use of the trigger is called, has ensured the exit of the TDP. The PDP-BJP alliance is also gone now. Then there is the near-exit of the Shiv Sena. Now the AGP is also threatening. Others may well follow.

Mr Modi is trying to regain trust. But it will not happen before the election. That’s what the use of the trigger does — there is no going back. Result: Everyone loses in varying degrees.

Folk Theorem

This is slightly more complicated, which is why only top-class politicians like Narasimha Rao, Manmohan Singh and Atal Bihari Vajpayee — and yes, even Kim Jong-un — have no difficulties in playing it.

Basically, it involves adopting strategies which need not be changed as long as the other player(s) don’t change theirs. PreTrump, this was what was happening in N E Asia. Not just this: This can also happen for any subset of strategies. Players keep on doing the same things.

The key here is in focusing on average payoffs or benefits of cooperation, rather than on extreme ones like the Modi-Shah duo had been insisting on till recently. In a nutshell, this strategy requires the willingness to compromise for long-term maximisation of average payoffs.

This is what Rahul Gandhi has understood now. This is what Sonia Gandhi understood from 2000 onwards. This is also what Mayawati and Akhilesh Yadav have also understood but not yet Mamata Banerjee.

So the moral: Cooperation is better than non-cooperation. Arvind Kejriwal could soon become a textbook example of this.