Game Theory (and Political studies) lessons from Ram Gopal Varma’s movie – Company

Housefull Economics continues to entertain but this time it is more grimy and tense as well.

The latest edition features Avinash Tripathi chipping with learning lessons about Game Theory from Ram Gopal Varma’s movie – Company.

Director Ram Gopal Varma released his movie Company in 2002. The second part of his gangster trilogy, it explored the innards of the Mumbai underworld. It chronicled the story of an ambitious and shrewd criminal usurping a criminal empire and moulding it in the shape of a commercial enterprise (hence the name). The movie begins with the story of a certain Aslam Bhai (Madan Joshi). Once upon a time a ferocious Don, Aslam Bhai is old, infirm and ailing. His two henchmen, Saeed (Rajendra Sethi) and Malik (Ajay Devgan), are jostling for power as his grip loosens. Faced with their rift, he tries to broker a peace between them and ostensibly manages to convince both to stay united. The truce is short-lived, however.

As Saeed, along with his brother, walks out of the meeting, settling himself in the front seat of his car, he plots his future strategy. His brother asks, “Now what?” He replies, “What else. Either Malik (will survive), or we will.” Almost immediately, there is a relaxed voice from the rear seat: Maine bhi yehi socha hai. Phark sirf itna hai ki tumse pehle socha. (“I also had the same thought. The difference is, I had it before you.“) Unknown to them, Malik had sneaked in the rear seat and ambushed them. A couple of minutes later, both Saeed and his brother were shot dead. A night of long knives follows. By a deft combination of carrots and sticks, Saeed’s associates are either made to switch their loyalty or neutralized. By the next morning, Malik has consolidated his power.

I was reminded of this movie sequence while reading a brilliant paper by the game theorists Georgy Egorov and Konstantin Sonin: “The killing game: A theory of non-democratic succession”. Their paper studies the emergence of retributive norms in non-democratic regimes, particularly during succession battles. In non-democratic regimes, succession is rarely peaceful. Quite often, it is a brutal saga of imprisonment, torture and murder.

What decides who to spare and who to kill?

What explains these differences? Why do some countries establish a ‘spare-your-opponent’ norm and others ‘kill-your-opponent’ norm? Is it possible for a country to change those norms? Are democracies fundamentally different from non-democracies in this respect? Specifically, is it possible for a democracy to lapse into a more violent equilibrium?

The paper answers some of these questions directly and gives a framework for thinking about others. Unsurprisingly, answers depend on the cost and benefit of respective choices. Imagine a dictator mulling over the decision to execute his opponent. There are two types of costs and benefits involved: immediate and reputational. Immediate benefit and cost include the prospect of enjoying power for a single period and the moral cost of assassinating an opponent. Besides these immediate benefits and costs, he should also factor in reputational benefit and cost of carrying out the execution.

When a winning politician decides to execute his opponent, he establishes a reputation for ruthlessness. The benefit of a ‘tough-guy’ image is that it deters other competitors. However, what goes around comes around. Rulers know that their rule is not eternal, and someday they may be vanquished by challengers. And then reputation for ruthlessness becomes an albatross. Once a dictator is generally perceived as ‘tough’, chances are high that he won’t be spared in the scenario when he ends up losing his throne. The decision to execute thus depends on trading off these costs and benefits.

The interesting thing about Egorov’s paper is that reputational costs and benefits are not merely assumed but explained. They depend on a number of ‘deep determinants’ which include frequency of rebellion, incumbency advantage, harshness of punishment and degree of impatience. Together with the immediate benefit and cost of executing opponent, these four factors determine what kind of norm emerges. 

Read on..

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