GAME THEORY

Can Game Theory Predict When Iran Will Get the Bomb?
By CLIVE THOMPSON
Published: August 12, 2009
Is Iran going to build a bomb?
Many people wonder, but Bruce Bueno de Mesquita claims to have the answer.
Bueno de Mesquita is one of the world’s most prominent applied game theorists. A professor at New York University and a senior fellow at the Hoover Institution at Stanford, he is well known academically for his work on “political survival,” or how leaders build coalitions to stay in power. But among national-security types and corporate decision makers, he is even better known for his prognostications. For 29 years, Bueno de Mesquita has been developing and honing a computer model that predicts the outcome of any situation in which parties can be described as trying to persuade or coerce one another. Since the early 1980s, C.I.A. officials have hired him to perform more than a thousand predictions; a study by the C.I.A., now declassified, found that Bueno de Mesquita’s predictions “hit the bull’s-eye” twice as often as its own analysts did.
Last year, Bueno de Mesquita decided to forecast whether Iran would build a nuclear bomb. With the help of his undergraduate class at N.Y.U., he researched the primary power brokers inside and outside the country — anyone with a stake in Iran’s nuclear future. Once he had the information he needed, he fed it into his computer model and had an answer in a few minutes.
In June, I visited Bueno de Mesquita at his San Francisco home to see the results. A tall man with a slab of gray hair, Bueno de Mesquita, who is 62, welcomed me with painstakingly prepared cups of espresso. Then he pulled out his beat-up I.B.M. laptop — so old that the lettering on the A, S, D and E keys was worn off — and showed me a spreadsheet that summarized Iran’s future.
The spreadsheet included almost 90 players. Some were people, like the Iranian president, Mahmoud Ahmadinejad, and Supreme Leader Ali Khamenei; others were groups, like the U.N. Security Council and Iran’s “religious radicals.” Next to each player, a number represented one variable in Bueno de Mesquita’s model: the extent to which a player wanted Iran to have the ability to make nuclear weapons. The scale went from 0 to 200, with 0 being “no nuclear capacity at all” and 200 representing a test of a nuclear missile.
At the beginning of the simulation, the positions were what you would expect. The United States and Israel and most of Europe wanted Iran to have virtually no nuclear capacity, so their preferred outcomes were close to zero. In contrast, the Iranian hard-liners were aggressive. “This is not only ‘Build a bomb,’ ” Bueno de Mesquita said, characterizing their position. “It’s probably: ‘We should test a bomb.’ ”
But as the computer model ran forward in time, through 2009 and into 2010, positions shifted. American and Israeli national-security players grudgingly accepted that they could tolerate Iran having some civilian nuclear-energy capacity. Ahmadinejad, Khamenei and the religious radicals wavered; then, as the model reached our present day, their power — another variable in Bueno de Mesquita’s model — sagged significantly.
Amid the thousands of rows on the spreadsheet, there’s one called Forecast. It consists of a single number that represents the most likely consensus of all the players. It begins at 160 — bomb-making territory — but by next year settles at 118, where it doesn’t move much. “That’s the outcome,” Bueno de Mesquita said confidently, tapping the screen.
What does 118 mean? It means that Iran won’t make a nuclear bomb. By early 2010, according to the forecast, Iran will be at the brink of developing one, but then it will stop and go no further. If this computer model is right, all the dire portents we’ve seen in recent months — the brutal crackdown on protesters, the dubious confessions, Khamenei’s accusations of American subterfuge — are masking a tectonic shift. The moderates are winning, even if we cannot see that yet.
Could this possibly be what will happen? Certainly Bueno de Mesquita has his critics, who argue that the proprietary software he uses can’t be trusted and may cast doubt on the larger enterprise of making predictions. But he has published a large number of startlingly precise predictions that turned out to be accurate, many of them in peer-reviewed academic journals. For example, five years before Ayatollah Khomeini died in 1989, Bueno de Mesquita predicted in the journal PS that Khomeini would be succeeded by Ali Khamenei (which he was), who himself would be succeeded by a then-less-well-known cleric named Akbar Hashemi Rafsanjani (which he may well be). Last year, he forecast when President Pervez Musharraf of Pakistan would be forced out of office and was accurate to within a month. In “The Predictioneer’s Game,” a book coming out next month that was written for a popular audience, Bueno de Mesquita offers dozens more stories of his forecasts. And as for Iran’s bomb?
In a year, he said with a wide grin, we’ll know if he’s right.
“I’m not an Iran expert,” Bueno de Mesquita told me cheerfully as we walked down his tree-lined street on our way to grab some Burmese food. Indeed, his career has been built on a peculiar concept: If you want to predict political events, wisdom and expertise, deep knowledge of a country’s culture and history, aren’t enough. To forecast the future, you need to be an expert not in statecraft but in the way individual people make decisions. You need “rational actor” game theory.
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Clive Thompson, a contributing writer for the magazine, writes frequently about technology.



Luiz Gonzaga Belluzzo:
Crentes e hereges
A CRISE financeira global que ora avassala o planeta, entre outras coisas, desvelou a precariedade das previsões econômicas. Já escrevi em outra parte, a propósito da crise asiática de 1997/98, que a reputação dos economistas e o prestígio de sua arte de antecipar tendências variam na mesma direção dos ciclos do velho, resistente, mas talvez nem tão surpreendente capitalismo. Quando os negócios vão bem, dizia então, as previsões mais otimistas são ultrapassadas por resultados formidáveis. É a festança dos consultores: o noticiário da mídia não consegue oferecer espaço suficiente para os profetas e os oráculos da prosperidade eterna. Na era da informação, a coisa é ainda pior: em tempo real, os meios eletrônicos regurgitam uma fauna variada de palpiteiros e adivinhões. Todos -ou, pelo menos, a maioria- tratam de insuflar a bolha de otimismo.
Naquela ocasião, chamei a atenção para as agruras de um renomado economista dos idos de 1929. Às vésperas do crash da Bolsa de Nova York, Irving Fisher declarou -extasiado diante das promessas de crescimento sem fim- que os preços das ações ainda estavam baixos. Fisher quebrou a cara, mas nem por isso foi punido com a expulsão da seleta galeria dos grandes. Os jovens economistas de hoje aprenderiam muito com suas contribuições ao estudo dos processos de deflação de dívidas, fenômeno que sói ocorrer nos momentos de reversão das etapas turbinadas por expectativas eufóricas e crédito abundante.
Daqueles tempos a esta parte, é mais fácil um camelo passar pelo buraco da agulha do que encontrar um estudante de economia que tenha lido Fisher ou, pelo menos, ouvido alguma notícia sobre sua obra. Esse solene desprezo pelos estudos clássicos sobre os ciclos e as crises do capitalismo é a moda nos círculos acadêmicos americanizados do planeta.
As novas teorias, aquelas que constituem hoje a chamada corrente principal do pensamento econômico, estão mais comprometidas em demonstrar que é improvável ocorrer o fenômeno que os velhos economistas investigavam. No rol dos malditos estão, entre tantos, Keynes, Schumpeter, Mitchell, Kalecki, Minsky.
Mas -é bom repetir- as façanhas do velho e nem sempre surpreendente capitalismo (pródigo em cra- shes e pânicos) lançaram no torvelinho da descrença as arrogâncias e as certezas dos sabichões. Mas, para quem não sabe de seus prodígios, a fé não só é capaz de mover montanhas como tem força para negar a realidade. Ainda recentemente, o jornal "Valor Econômico" publicou uma excelente reportagem sobre as diferentes visões e estruturas analíticas que porfiam no campo da chamada ciência triste. A turma da corrente dominante retrucou com impropérios aos questionamentos de sua sabedoria e respeitabilidade.
Um jovem crente indignado escreveu que o jornal "confessou" sua adesão ao pluralismo.
Imagino que, se vivesse na era da Inquisição, o jovem estudioso da produção de riquezas mandaria à fogueira as obras e os seus autores heréticos. LUIZ GONZAGA BELLUZZO, 66, é professor titular de Economia da Unicamp (Universidade Estadual de Campinas).Foi chefe da Secretaria Especial de Assuntos Econômicos do Ministério da Fazenda (governo Sarney) e secretário de Ciência e Tecnologia do Estado de São Paulo (governo Quércia).



September 15, 2009
Great (economic) Equations
I'm currently reading The Great Equations*; a book about the fundamental mathematical equations that have changed science. Equations included are the Pythagorean Theorem, E=mc2 and Euler's equation among others. This got me thinking, what are the great equations in economics? In no particular order, here's an incomplete, premature and highly biased list of 5 great equations in economics**--with apologies for the mathematical notation that is difficult to replicate in Typepad. These aren't all 'equations' in the mathematical sense, but rather mathematical-looking expression that represent familiar economic concepts. ... ... ... ... ... ... .... ... ... ... ... ... ... ... ...



Entrevista Robert Aumann
"O Irã não nos atacaria"
O matemático israelense, vencedor do Prêmio Nobel de Economia em 2005, usa a Teoria dos Jogos para analisar o conflito no Oriente Médio
Diogo Schelp
Divulgação
"Fazer concessões é o pior caminho para conseguir a paz"
Robert Aumann recebeu, em 2005, o Prêmio Nobel de Economia por seus estudos na área da Teoria dos Jogos. Suas teses ajudam a compreender os princípios que regem os conflitos e como se consegue convencer adversários a cooperar entre si. As teorias do judeu ortodoxo de 79 anos têm aplicação prática na economia, na diplomacia, em política e até em religião. Aumann começou a se interessar pelo assunto na década de 50, depois de conhecer John Nash – vencedor do Prêmio Nobel de Economia de 1994 – e de receber a missão de desenvolver estratégias de defesa para os Estados Unidos em plena Guerra Fria. Aumann nasceu na Alemanha e sua família emigrou para os Estados Unidos em 1938, para fugir do nazismo. Um de seus filhos morreu na primeira guerra do Líbano, em 1982. Aumann, que vem ao Brasil no próximo dia 9 para uma série de palestras, concedeu a seguinte entrevista a VEJA, de sua sala na Universidade Hebraica de Jerusalém.
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