Risk, Uncertainty–From Governor Weld to the Modern Financial System

Canadian academic Thomas Homer-Dixon (we will read one of his papers this semester in Intro to IR) has written a piece for Canada’s “paper of record”–the Globe and Mail, which is titled “From Risk to Uncertainty.”  Those of you in my intro to comparative politics class will surely recognize immediately the difference between the tho concepts.

Remember when we read the first two chapter of Shepsle and Bonchek on instrumental rationality, the authors used the example of then-Massachusetts Governor Weld.  Weld had to decide whether to run for Governor again, or to commit to challenging Democratic Senator Ted Kennedy’s Senate seat.  A win there would have given him a nice platform for an eventual presidential run.  Weld, as we know, was operating in a world or risk rather than uncertainty when making his decision, given that there were public opinion polls published that estimated his chances of winning in either election.

What is the difference between risk and uncertainty and how does it apply to the contemporary global financial system (which, by the way, for those of you not paying attention is precariously teetering on the edge of meltdown–you heard it here first!)?

So the rules of the game have now fundamentally changed. Our global financial system has become so staggeringly complex and opaque that we’ve moved from a world of risk to a world of uncertainty. In a world of risk, we can judge dangers and opportunities by using the best evidence at hand [what Shepsle and Bonchek call beliefs] to estimate the probability of a particular outcome. But in a world of uncertainty, we can’t estimate probabilities, because we don’t have any clear basis for making such a judgment. In fact, we might not even know what the possible outcomes are. Surprises keep coming out of the blue, because we’re fundamentally ignorant of our own ignorance. We’re surrounded by unknown unknowns.

Playing the Dominant Strategy in a Prisoner’s Dilemma Situation

As you’ll see in lecture tomorrow, instrumentally rational players will also choose to “defect” in a priosoner’s dilemma type situation even though they could be much better off absolutely if they and their opponents could learn to cooperate.  The chart below has been created using data from the simulation of yesterday.  What is take-home message from the chart?  Why is the relationship between the phenomena displayed not completely linear?  Think about the nature (i.e., the specific rules) of the oil game we played yesterday. (The plot below is a box plot, which is a way of summarizing the means, range, and certain percentiles of the values of a single variable based on another variable.)


PLSC240–Next Blog Assignment

Hello student-bloggers:

Your next blog post will be due on Friday, February 15th at 6:00pm.

The prompt for your post is “The rational choice/political culture debate and [my topic].” Once again, I will emphasize that you have wide latitude to post, and anything will be acceptable as long as it is somehow related to the prompt above. In addition, please take note of the rubric I will be using to grade your blog.  Remember that I will give you a provisional grade as of the mid-term break (this grade will not be factored into your final grade; it is meant to give you an idea of what your blog grade would be at the end of the semester if the character/quality of your posts were to remain the same until the end of the semester).  You can find the rubric in the Assignments folder of Blackboard.

Best of luck,


Ethnic Cleansing and Violence in Baghdad

The Washington Post carries a story on the front page of its Sunday edition, which describes the changing nature of residential segregation in Baghdad, from the perspective of returning refugees and displaced persons. Included is a compelling map [click the link on the left for a larger view] of Baghdad showing the dynamics of the process of ethnic cleansing (and ethnic consolidation) of Baghdad’s map_ethnic_cleansing_baghdad.gifneighborhoods between April 2006 and November 2007.

This could have something to do with the decreasing levels of violence in Baghdad over the last six months or so. (Of course, the increased US troop presence helps, but a more compelling argument comes out of work by many political scientists on the rational, or strategic, nature of inter-ethnic violence. The violence that is perpetrated by the respective sides during episodes of inter-ethnic conflict is rarely random.

In my own work in Croatia, there was a compelling strategic logic to the violence perpetrated by both sides. Territory–towns, regions, cities, etc.,–that was deemed strategically important was targeted, while territory that was not strategically important was left alone. A similar dynamic may be occurring in Baghdad. With the task of segregation of Baghdad’s neighborhoods a fait accompli, the need and desire, on the part of the sectarian militias, to use violence has diminished considerably.