Crimea Through a Game-Theory Lens

From Tyler Cowen, at the New York Times (via Memeorandum).

I think he nails this part about U.S. credibility, although it's not just Crimea. U.S. credibility has been frittered away throughout the Obama years. It's too bad, but our adversaries have no reason to fear U.S. power:

How much credibility will the United States lose if it doesn’t respond forcefully to Russian action? This, too, is a problem of game theory.

A commitment by a sovereign state is credible only when that state’s self-interest dictates honoring it. Previous American pledges to help or protect Ukraine were not all that credible to begin with, given the greater power and historical influence of Russia in the region. Failing to protect Crimea therefore doesn’t automatically lead to a big shift in the world’s perception of American willingness to honor commitments where the nation’s loyalties and interests are more certain. Daryl G. Press, a professor of government at Dartmouth, articulates a general version of that argument in his book “Calculating Credibility.”

Still, there may be a net loss of credibility, perhaps a serious one, when the world is uncertain where American self-interest lies. For instance, how dedicated is the United States to protecting various disputed small Asian islands from Chinese domination or conquest? How much does America care about the de facto independence of Taiwan these days, or about limiting China’s influence in the South China Sea? The answers may not be obvious, especially in a diverse democracy like ours.

But for strategists in China and elsewhere in Asia seeking clues to American behavior, it’s possible that the effectiveness of the United States response on Crimea will matter a great deal. For actual deterrence, the United States would mainly need to create negative consequences for Russia, not just engage in posturing.

In any case, it is unlikely that Russia will happily reverse course and hand back Crimea, and so we may well see some careful calculations on how negative those longer-term consequences will be. In this sense, economics — through the medium of game theory — is again earning its moniker as the dismal science.