A fun game theory example from Scientific American (H/T 3 Quarks):

Lucy and Pete, returning from a remote Pacific island, find that the airline has damaged the identical antiques that each had purchased. An airline manager says that he is happy to compensate them but is handicapped by being clueless about the value of these strange objects. Simply asking the travelers for the price is hopeless, he figures, for they will inflate it.

Instead he devises a more complicated scheme. He asks each of them to write down the price of the antique as any dollar integer between 2 and 100 without conferring together. If both write the same number, he will take that to be the true price, and he will pay each of them that amount. But if they write different numbers, he will assume that the lower one is the actual price and that the person writing the higher number is cheating. In that case, he will pay both of them the lower number along with a bonus and a penalty–the person who wrote the lower number will get $2 more as a reward for honesty and the one who wrote the higher number will get $2 less as a punishment. For instance, if Lucy writes 46 and Pete writes 100, Lucy will get $48 and Pete will get $44. What numbers will Lucy and Pete write? What number would you write?

If you’ve studied game theory, then finding the Nash Equilibrium will be a fun exercise to dust off your skills. For those who haven’t, the article gives a decent summary of where the solutions comes from.

In a move sure to draw the shocked horror of China hawks, Dr. Barnett proposes a simple solution to the “sell F-22s to Japan” issue: sell them to both Japan and China.

Granted, doing this would undermine much of the justification for the F-22 in the first place, but that just brings us back to the all-important discussion of what America’s strategic priorities ought to be.

Kris Alexander’s interview with John Robb picks up on some excellent nuggets. (H/T to Shloky)

First, there is a classically succinct summary of the consequences of network theory by Robb:

…the networks we rely upon are optimized for efficiency and to a certain extent, resilience against random failures. The downside of this is that they handle intentional attacks very poorly. So, if a terrorist picks the right node to attack, the entire network can cascade into failure…

Second, Robb gives an explanation for MEND’s strategic goals:

MEND wants to make Nigeria ungovernable so eventually they can control a large share of the oil production. In the chaos this production may be severely limited, but there would still be a lot of money to be gained. There is lots of money sloshing around in hollow states.

This directly addresses some thoughts I posted last week. Robb is making the argument that even if MEND’s disruption attacks severely shrink the overall oil revenue in Nigeria, its own proportion of those revenues could increase markedly, meaning more money and power for MEND. This is Barnett’s “smaller pie, bigger percentage” argument for why Gap strongmen can have an interest in remaining disconnected [1]. I don’ t know enough about the specifics in Nigeria to judge whether the goals I examined are MEND’s true motivation (which would require a state to realize) or whether the goals Robb describes are the true goal. Anyone out there have more information to offer on this?

Finally, it’s awesome to see such serious convergence between Barnett and Robb on the topic of SysAdmin functions. Given how important these reforms are, it is excellent to see the big thinkers of the day pulling in the same direction.

Q: So if we continue on the path of nation building, do we even have a model of a resilient community to export?
A: No, but my ideas have a struck a chord with people interested in local solutions ranging from local food production, solar power, etc. I think we have an excellent opportunity ahead of us. If we crack the code on this, we can export it to the world.

And relating to where more investment is needed:

Investments in information warfare and unrestricted warfare. This is how most state on state warfare is going to fought in the future and it will be very useful to have as a means of going after global guerrillas. This means everything from the ability to mount wars over the Internet to providing training and guidance to US corporations operating in dangerous areas. This is an area that hasn’t been provided the resources it needs. It also, due to the complexity and irregularity of it, requires much more diversity in skill sets than you typically get from the big military contractors or that from within the military. So far, this has been done in an ad hoc way and the results have been far less than they should have been.

• Investments in communities in a box. One of the things we see again and again is the need for the ability to provide instant infrastructure to damaged communities. This ranges from a community cut off due to security needs in counter-insurgency to disaster relief. How do you package infrastructure for 20-30,000 people in a box? The military should be solving this.

An example of instant infrastructure include the ability to rapidly set up cell towers (possibly using an aerostat and initially restricted to SMS text messaging due to bandwidth constraints) and using COIN technology to quickly aggregate data on what aid is needed where. In order to get NGOs and US corporations operating in dangerous areas, common standards can help integrate private and non-government efforts within a security envelope. By containerizing power generation, hospital facilities, water purification functions, we could be well on our way to being able to deploy instant infrastructure for 20-30,000 people within a very short timeframe.

We need to get out in front of these sorts of specific recommendations so that when the call comes (and it will come sooner than we expect) there will be some policy recommendations already ready to go.

[1] If the NOCs were to open up their national industries to competition, there would be a bigger pie for the country as a whole, but less control for the elites who dominate the NOCs and?likewise?the governments that own them. This is classic Gap state behavior: preferring a smaller pie that they can control more fully than a larger one that might escape their control. This is the essence of the oil curse: you treat wealth as a zero-sum concept. You act as though there is only so much wealth in the world, so you must hoard what you have.