February 16, 2015
Greek finance minister and academic game theorist Yanis Varoufakis has an op-ed in the New York Times today arguing that he does not really believe in game theory.
Because I spent many years during my previous life as an academic researching game theory, some commentators rushed to presume that as Greece’s new finance minister I was busily devising bluffs, stratagems and outside options, struggling to improve upon a weak hand. … The trouble with game theory, as I used to tell my students, is that it takes for granted the players’ motives.The context is the negotiations between Greece and the other member states of the European Union over Greece’s debt program, where Greece and other member states (especially Germany) are engaged in hard bargaining. Varoufakis argues that he has sincere motivations which mean that he will not give into EU threats to abandon Greece if it does not stick with some version of the current bailout program.He believes that Europe is thinking about how to deal with indebted countries in a fundamentally incorrect way. It needs to re-engage with European citizens, and recognize the appalling poverty that its current policies are creating. Varoufakis argues that his only ethical choice is to stick to the lines he has laid down, even if this potentially causes pain to the Greek people whom he represents.