The Game Theory of the Fiscal Cliff, or Why John Boehner May “Act the Diva”

John Patty:

In a nutshell, the uncertainty about Boehner’s bargaining position relative to his own caucus can generate sufficient incentives for him to “act the diva,” and seem to hold court in a fashion befitting LeBron’s act leading up to “The Decision.”  The simple explanation of the strategic incentives underlying this is that Boehner can utilize Obama’s uncertainty about Boehner’s bargaining ability to make it appear like, even if Boehner does “care at least as much as Obama” about resolving the fiscal cliff in an expeditious fashion, that Boehner can’t “deliver a deal” equal to Obama’s “reservation price” (or, in other words, that Boehner can’t get his caucus to agree to Obama’s demands).  The implicit value to Boehner is that Obama, on the margin, will give in a little to secure what he perceives as the marginal certainty of securing a deal from Boehner’s copartisans.  In other words, at the end of the day, as 2011 purportedly demonstrated, Boehner may ironically (but completely classically from a game theoretic vantage point) benefit from being able to portray himself (accurately or not) as not being able to corral his own troops.  ”Sir, I told them gruel was sufficient to survive the night, but they simply insisted they’d die without gruyère.”

More at the link.

6 Responses to The Game Theory of the Fiscal Cliff, or Why John Boehner May “Act the Diva”

  1. Steve Smith November 26, 2012 at 10:21 am #

    …except that congressional Democrats know this and (already) are playing hard to get on entitlements without tax rates. As Pelosi noted last week, votes from about half of the House Dems are likely to be needed so they, too, must be at the bargaining table. Uncertainty really can be manufactured in politics.

  2. OneEyedMan November 26, 2012 at 11:42 am #

    The link has a problem. Please correct it when you get a chance.

    • John Sides November 26, 2012 at 12:59 pm #

      Link is fixed. Apologies.

  3. Barry November 26, 2012 at 11:53 am #

    And (from Chait’s analysis in NY Mag), the default state upon nobody getting anything passed is acceptable from the viewpoint of Obama and the Dems in general. Not optimal, but acceptable. This means that the pressure is on the GOP to actually make a deal, and to stick with it.

  4. reader November 26, 2012 at 11:56 am #

    Yep. Would it be technically correct to think of this in heresthetic terms, as strategically increasing the dimensionality of the space, to include not just the substantive dimension, but also the uncertainty-certainty one? Or is it just thought of most simply as hand-tying?

  5. John Patty November 26, 2012 at 4:05 pm #

    First, thanks for the link!

    Second, I agree completely, Steve. I discuss this (in reference to Obama, but the larger point about Dems in general is essentially the same) later on in the post:

    “…once you recognize that Boehner has this incentive, then one recognizes that Obama has an incentive to overstate his willingness to “wait the GOP out.” In other words, Obama’s uncertainty abut the GOP’s ultimate and effective preferences (more appropriately, the shared knowledge of Obama’s uncertainty) creates an incentive for Obama to create uncertainty about his own resolve.”

    Replace “Obama’s resolve” with “Congressional Democrats’ willingness to do Obama’s bidding,” and I think you and I are in agreement about the strategic incentives for uncertainty.