A woman watches a television screen showing an image of Kim Jong Un, leader of North Korea, center, during a news broadcast. (Photographer: SeongJoon Cho/Bloomberg)

Game Theory Scowls at Trump-North Korea Talks

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(Bloomberg View) -- President Donald Trump’s possible meeting with Kim Jong Un to discuss North Korean nuclear weapons is considered a fairly unpredictable event. It’s worth a look at how an economist might use game theory to think about such a summit, if only to explain why there is more room for things to go wrong than to get better.

QuickTake North Korea’s Nukes

Game theorists often approach a problem by first considering where a series of strategies might end up, and then working backward to understand current choices. When it comes to North Korea, the theorist would start with a scenario in which the country is just a few years from having intercontinental missiles able to target major cities in the U.S. That is good for their leadership and very bad for others, including a South Korea that would end up more vulnerable to a North Korean invasion.

Given that path, it is the U.S. and South Korea that need something from a summit, and that strengthens the bargaining hand of Kim.

One possibility is that you think a preemptive attack on North Korea is a good idea, or at least necessary. That is far from my view, partly because one never knows how a war with so many moving parts, and so many possibilities for misread signals, is going to turn out. But if you are that hawkish, you might welcome the summit. The U.S. could press for denuclearization, Kim would not accept that (remember Moammar Al Qaddafi and Saddam Hussein?), and then Trump could claim that everything had been tried and a bit later initiate the attack.

You might think an attack on North Korea is a dubious idea, but that the U.S. could use the summit to bluff and extract concessions. But that is unlikely to work, because any plausible bluff will only convince Kim all the more to keep advancing his nuclear arsenal. 

Another possibility is that you might use the summit to bribe Kim with the promise of aid, to somehow freeze or limit his nuclear program. But South Korea, with American backing, already has tried that policy in the recent past and clearly it failed. 

One scenario is simply that today’s more powerful North Korea can command a much, much higher bribe. But for that to yield anything positive for the U.S., the bribe would have to be so high that North Korea would not cheat on the agreement for fear of losing the payments. Even if you think Trump might consider that “the deal of the century,” it is hard to see Congress allocating so much money to a hostile dictator, with little promise of anything firm in return.

Another problem with the bribe scenario is the behavior it would induce in other nations. Game theory stresses how single actions can signal an entire future for other related cases. North Korea won’t be the last country to acquire nuclear weapons; a short list of other candidates includes Turkey, Saudi Arabia, and Vietnam. These countries will be watching the North Korean negotiations closely. If the U.S. offers payments to Kim to suspend nuclear testing or weapons development, more countries will be tempted to move in the nuclear direction, if only to receive the payments and perhaps the attention as well.

If North Korea and the U.S. simply talk, and nothing comes of it, that raises the status of Kim Jong Un, who then would keep improving his missiles anyway. So if the U.S. goes ahead with the talks, you might rationally infer that the risk of war has gone up. Furthermore, there is the risk that Trump or Kim could feel humiliated by a summit that yielded nothing, again raising the chance of war or miscalculation leading to disaster.

In chess there is a concept known as “zugzwang,” or “compulsion to move.” It’s used to describe the position of a player with no good options who would prefer to do nothing at all. That’s not a possibility in chess, so the unfortunate player faces a situation in which all roads involve a deterioration of his position.

So is there any move that leaves the U.S. better off? The best possibility I can see comes through China. A summit would focus attention on the North Korean threat, and as a result the Chinese citizenry might demand a solution to the standoff. That could mobilize a stronger Chinese response and a tightening of sanctions, with a constructive response in turn from Kim, while in the meantime the talks keep the South Koreans from rejecting their American alliance. Still, that strikes me as something of a longshot.

Many people, including supporters of this administration, have been critical of Trump’s use of Twitter. But the thing is this: When zugzwang has set in, talking directly can end up a whole lot worse.

This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

Tyler Cowen is a Bloomberg View columnist. He is a professor of economics at George Mason University and writes for the blog Marginal Revolution. His books include “The Complacent Class: The Self-Defeating Quest for the American Dream.”

For more columns from Bloomberg View, visit http://www.bloomberg.com/view.

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