Donald Trump, accidental master of game theory

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It's Donald Trump's world now and the rest of us are just living in it. Or maybe it's not clear enough: we live not only in his world but in his head. Nearly two months into office, the president-elect of the United States has taken the rest of the world (including veteran American politicians) by surprise with one incredibly unconventional cabinet appointment after another.

Trump's appointments, as well as his inconsistent policy statements in the past, have sparked a wave of questioning from well-meaning analysts. Does Trump really think (now retired) Matt Gaetz and Tulsi Gabbard could do a good job in the positions he chose them for? Or are these provocations intended to separate those of his supporters who retain an independent spirit from those who will kiss the boss's ring, regardless of outrage? Or is the intent to cause a congressional gridlock that would allow Trump to invoke the never-before-used power to suspend the legislature?

The same goes for political questions. What is Trump's plan for Ukraine? Is he really going to sell kyiv to obtain a commercial advantage unknown to Russian President Vladimir Putin? And what about the tariffs: will they be put in place to strengthen the United States' bargaining power with other economies, or does Trump simply want to impose them, regardless of the concessions? what others could grant?

I don't really know how to answer these questions with confidence. As my colleague Ed Luce says, on a lot of important issues, Trump could decide one way or the other. But I believe it is unwise to assume that there is a secret intention to be discerned. Instead, uncertainty is the intention.

There is a plausible view that Trump's behavior is nothing more than what appears on the surface to be simple political incompetence on the part of a hot-headed and mediocre business executive. But that ignores how unpredictability serves Trump's interests, and Trump knows it.

At their core, autocrats (current and potential) and gangster bosses thrive on fear and reject the rule of law (in the broadest possible sense of a system of rules that applies consistently to everything). the world). As veteran Brexit commentator Chris Gray explains in a thoughtful article, unpredictability based on the personal whims of leaders is at the heart of how they run things, a feature, not a bug.

This is the light, I think, that we should view the new government efficiency agenda led by Elon Musk and Vivek Ramaswamy. Their no-nonsense op-ed in the Wall Street Journal argues that their impending elimination from the civil service will not target specific employees and that those fired deserve to be treated with respect. But Musk has already unleashed Twitter's old groups against named officials who may now suddenly find themselves exposed to online abuse, and Ramaswamy has proposed completely arbitrary firing based on odd or even social security number digits, as reported by the Journal. Again, unpredictability is the intention here.

There is a branch of economics that understands this perfectly. Game theory studies strategic behavior: situations in which the best thing you can do depends on the actions of others, which they in turn choose based on what they think you might do. A basic concept of game theory is that of a mixed strategy: choosing randomly between possible actions (it is not necessary that all actions are chosen with the same probability).

A mixed strategy, i.e. random, may be better for you than a non-random strategy (i.e. predictable behavior) because it prevents your opponent from moving the game in a direction that is better for him and worse for you. It may even be the only approach that stabilizes a situation where the interests of different actors are not aligned.

Think about sports: the surest way to prevent your opponent from predicting where you will aim your penalty or serve after observing the patterns of your past behavior is to literally randomly choose the direction based on whether the seconds counter of the stadium clock is odd or odd. even when you glance at it, let's say. Likewise, creating uncertainty and a fog of war, even where none initially exists, is often advantageous.

Putin and the Russian secret services have understood this well. Putin is an emotional man, some analysts say, and while I have no problem believing that he truly and passionately believes in the historic destiny of Russia that he announced before attacking Ukraine, the fact is that even if he doesn't, he has an interest in being seen as non-rational. This is also true at a systemic level: the goal of disinformation campaigns is not so much to make people believe a particular lie as to prevent them from believing that anything could be true, in a kind of ultimate ontological uncertainty .

True chance is difficult to manufacture. So it helps to be seen as a little crazy or a little out of control. Indeed, the nicely named shaky hand balance is a concept from game theory showing how optimal strategies must treat the behavior of others as constantly subject to random disturbances: the finger that presses the button can always tremble. (In my opinion, this name illustrates how game theory is by far the most creative branch of economics.)

But back to Trump. If you agree to see him as an expert game theorist, accidental but instinctive, what lessons should you learn from him? I can think of two: one for him, one for the rest of the world.

The first is that even he is not without limits. He seems to insulate financial markets (unlike banks, as his business career shows) from madness that knows what to do. During his previous term and this time, he appointed Treasury secretaries who could be counted on to run the Treasury in a fairly conventional way: Steven Mnuchin then, Scott Bessent today. Strikingly, Mnuchin even led (together with French Finance Minister Bruno Le Maire) the multilateral process aimed at fundamentally reforming global corporate taxation. As for Bessent, read Shahin Valles' argument that he might just be the man to successfully repeat the 1980s Plaza Accord on the realignment of world currencies.

The lesson for others is that it is unproductive to spend much effort trying to guess Trump's true intention behind the chaos. What should you do instead? In game theory models, the answer will often be to randomly choose your own options. But countries that cling to the rule of law appreciate the confidence and effectiveness they derive from predictability, so beyond a few close negotiations (in the trade area, perhaps), which do not work hardly for Europe.

A better response must be to get used to Trump's game. In terms of attitude, that means what Gray calls playing long and calm and avoiding nervousness. In practice, this means the more difficult task of identifying actions for which it does not matter what the United States does. For example: Europe should strive to redirect its export surpluses towards domestic investment within its own objectives, as I argued last week.

The important thing is to choose clearly the things that you must achieve and that you can achieve without relying on support from the United States. From there, continue.

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