September 6, 2009

Game Theory on Obamacare

There's not-so-simple a simple way to predict what the Obama end game on health care - it's called game theory. It's a way of determining what strategy a person (or group) will use when they are unable to communicate or negotiate with their counterpart or opponent. Not everyone knows what game theory is. It's actually not that complicated when it's distilled down into it's basic premise. So first, for those unfamiliar with game theory, here it is, as explained by a Ninja!

How does that work with respect to government paid health care, or Obamacare? It's pretty simple actually, although there's a twist.

Game theory on a government option has two options for Democrats - include a public option or don't in the legislation put forward. For Republicans there are only two choices as well - oppose the version Democrats put forward or oppose it. Of course this ignores the possibility of trying to be a participant in the design process. While there's supposedly a "bi-partisan 6" in the Senate, holistically it's not really an option in the bigger picture (i.e. for the GOP as a whole). Those bi-partisan 6 are most assuredly involved in their own individual game theory situations.

This is a good time to point out the assumptions in play here;
  • The participants involved on either side here are Obama (and by extension, Democrats) and Republicans.
  • The choices are finite as defined above.
  • Lastly the outcomes - game theory is dependant on the value of the outcomes. But there are many ways to assign the values in this case. Are the scores based on what version of the bill passes? Are they based on whether something gets passed at all? Are they based on the political gain or loss by each party?
This last point is very consequential. The two dimensional game theory grid, is in fact multi-dimensional. The outcome impacts all of those questions, and others. In other words there are likely 4 or 5 game theory grids to consider. It's better visualized as an equation with some sort of weighted average assigned to each outcome grid. But it's Saturday, I'm not feeling energetic enough to apply a regression analysis to this. Instead I'm going to make a big assumption and proceed on that basis.

The assumption?

Everyone in Washington D.C. involved in this health care decision is basing their strategy on re-election. Further, I'm assuming that the majority of Democrats represent liberal districts and the majority of Republicans represent conservative districts.

To quickly summarize the outcomes for Obama/Democrats the most likely political preference would be (1) They include the public option and the Republicans support it - 10 points. (2) They drop the public option and get Republican support for some other form - 6 points. They lose some radical left support but gain back some center support and can claim to be bi-partisan. (3) They keep the public option and do not get Republican support - 4 points. They appease their base but lose more in the center and lose all claim to be bi-partisan. (4) They drop the public option and get no gain of Republican support - 1 point.

For the Republicans the preferences are as follows (1) Democrats drop the public option and they still oppose it - 10 points. Arguably it's less because they lose the bi-partisan label as well. But they win by stopping government health care and haven't signed on to an expensive government program. (2) If the legislation includes a government payer option but the Republicans oppose it the GOP gains by sticking to it's principle and the Democrats suffer politically as noted above - 6 points. (3) The legislation drops the public option and the GOP signs on - no doubt losing as much of the middle ground as they potentially gain, not to mention losing base support - 3 points. (4) In the it'll never happen category - the Democrats keep government payer and the GOP supports it - 1 point. This is so bad as to be untenable as an option.

There is no Nash equilibrium in this instance so each party will simply maximize their own strategy - the Democrats including the government health care and the GOP opposing the legislation. The only way the Democrats can consider dropping the government option is if they see the value of each option differently.

That in itself is a telling indicator however. If the Democrats and Obama are willing to drop the government option at this point, it means the values in that column are higher for them. That in turn means that getting it passed is the most important thing. That could be politically motivated (they see more political gain) or because the agenda would become getting government payer in the next round. Either way, it's bad news for Republicans.

As for the legislation passing, the only way to stop it, since the GOP cannot do so, is increased pressure from the public. As always, it comes down to you.

No comments:

Post a Comment

Disagreement is always welcome. Please remain civil. Vulgar or disrespectful comments towards anyone will be removed.

Related Posts Plugin for WordPress, Blogger...

Share This