Friday, 13 October 2017

SOVEREIGN GAME: HOW TO SOLVE SOVEREIGNTY CONFLICTS (PART 8 OF 21)

Having explained some features of this imaginary story and some of the crucial differences with real life, it is time to go back to the negotiations. To recapitulate, we have three populations (Khemed, Syldavia, and Borduria) that are part of a sovereignty conflict or dispute. For whatever reason, each party claims exclusive sovereignty over Khemed. Since their world might perish soon they have all decided to go into negotiations in relation to the sovereignty over Khemed. That is mainly because Khemed’s territory is rich in a very rare metal that happened to be necessary for the construction of inter-stellar flying objects. All three parties think of using these inter-stellar flying objects in the event the world came to an end and needed to evacuate.


Each of the parties has chosen a representative. The representatives of the three populations will go into the negotiations without knowing whom they represent but with access to any other information about the three parties, their claims, and anything and everything related to Khemed and its sovereignty. By acting in this way, they ensure that none of the parties is more or less advantaged or disadvantaged when choosing how sovereignty will be allocated.



Decision making rules
The first thing the representatives will have to agree upon is the procedure they will follow in the negotiations, the applicable rule. When making decisions in cases we have to choose, it is possible to abstract all of these decisions in three very basic categories:

Maximax
One has to be an optimist or a “risk-seeking” investor to choose this option. It is for people who seek to achieve the best results if the best happens. We would have to assume that whatever action is taken, the best will happen.
In the case of sovereignty conflicts similar to our story that would mean that each of the representatives would seek the complete and exclusive sovereignty over Khemed for the party they represent.

Maximin
One has to be a pessimist or a conservative individual who chooses the option that maximises the minimum pay-off achievable. In our fictional story, each of the representatives would look at the worst possible outcome, and then selects the highest one of these. That is to say, our representatives would choose the outcome which is guaranteed to minimise losses. By doing this, our representative seeks to achieve the best results if the worst happens.

Minimax
This option minimises the maximum regret. It is useful if our representatives are risk-neutral decision maker. That is to say, the representatives in our story would not wish to make the wrong decision.

More details about decision theory following the link below:

Bearing in mind the conditions under our representatives will have to select the applicable rule to allocate the sovereignty over Khemed (they all have access to all the available information but do not know who they represent) it is highly possible they will choose the maximin rule. It is reasonable to believe they would make a conservative choice.
Each of the representatives will consider a series of important points when making the decision. First, any choice they make will have to be justified to the people they represent either in Khemed, Syldavia and Borduria. Secondly, the decision they make may imply gains but also loses. That is because, the party they represent may not have for example the means to explore and exploit the rare metal; or if they had the means to do it, they may not be geographically ideally placed or may not have sufficiently specialised workforce to do it. Finally, the situation in any case is volatile and has risks. The world is about to end, there is only one solution to save them all, and in the case any of the parties is left aside, it is unclear that party will accept such an agreement.


Let us assume they selected the maximax rule. That would mean one of the parties would be allocated the total and exclusive sovereignty over Khemed. In turn, that party would be the sole responsible for the exploration and exploitation of the rare metal. In principle, it seems to be a win-win situation for the chosen one. But if the chosen one were to be Khemed, they would not have the means to do it. And if the chosen ones were either Syldavia or Borduria, they would have to either send their workforce to Khemed or agree with Khemedians to cooperate.

If they selected minimax and did not want to make any wrong decision, they would probably remain neutral. That is to say, the representatives would most likely choose a status quo. If this was the case, all the parties would simply be awaiting the end of the world unless any form of cooperation was agreed.

Therefore, it is highly likely the representatives of Khemed, Syldavia and Borduria selected the rule of maximin to allocate sovereignty over Khemed. That would mean that all the parties would share a slice of the sovereignty. With this kind of arrangement, even if they represented the party with the least advantaged position, they would still be able to use the rare metal and escape from  the end of the world. Why? If they were Khemedians, they would have access not to technology and means for exploitation and exploration that otherwise they would not. If they were Syldavians, they would have access to the rare material that is not present in their territory and they know it is necessary to avoid extinction. Finally, if they were Bordurians, like Syldavians they would have access to this are material and like Khemedians, they would have access to technology and means of exploration and exploitation. Someone may ask, why Khemed and Syldavia would accept the involvement of Borduria? Many reasons would justify their inclusion: geographical proximity, local workforce, ties of various natures with Khemedians.

Sovereignty disputes are under an umbrella of uncertainty. All the parties start with a status quo and any decision in the negotiations may imply actions on either side that may result in gains but also losses for any of them.
The representatives of Khemed, Syldavia and Borduria have to bear in mind that, although they may have information about Khemed, they do not know its factual features in the future and that they do not know whom they represent.
Indeed, maximin is not a general rule in cases of uncertainty. However, it is the desirable one in situations of high indeterminacy, when the stakes are high and the worst position is tolerable.
The situation is very similar to the one in which there are two people rowing a boat that neither can row alone. These two people need each other in mutually beneficial coordinative practice. Sovereignty conflicts are just in the same situation: if none of the parties is willing to cooperate and start negotiations in order to leave the zero sum game or non-zero sum game, they will all perish on the same boat.

Jorge Emilio Núñez

13th October 2017

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