Credible threats versus mere bluffs

Update (3/11): I woke up to some good news this morning: the Major League Baseball dispute referred to below has now been resolved. (I will blog more about MLB in the next day or two.)

  • How many more regular-season games will the Commissioner of Major League Baseball cancel, and which side in this dispute will cave in first, the team owners or the players’ union?
  • Is Putin really about to deploy tactical nuclear weapons in Ukraine, or is he just bluffing?
  • More generally, how can we tell when a particular threat is genuine or fake?

We could use “game theory” to answer these questions (see here, for example), but game theory presumes hyper-rationality, to borrow my mentor Richard Posner’s apt term. But what happens when we are dealing with a mad despot or a group of greedy owners or an avaricious labor union? In short, we also need to add culture, emotions, and psychology into the mix, and that is why the best work in this area — what I like to call “the psychology of games” — is still this remarkable collection of illuminating essays from the 1950s a/k/a “The Strategy of Conflict“. (The author of those essays, my intellectual hero Thomas Schelling, is pictured below.)

Thomas Schelling, Nobelist and game theory pioneer, 95 – Harvard Gazette
Photo credit: The Harvard Gazette

About F. E. Guerra-Pujol

When I’m not blogging, I am a business law professor at the University of Central Florida.
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10 Responses to Credible threats versus mere bluffs

  1. Nice, you found the free PDF. I found it a while back. However, I really do prefer tangible books for anything longer than 100 pages.

    • same here! (in my case, it’s even worse: anything over one page I need to print out in order to read it properly)

      • Ideally, no should be reading any kind of extensive text off of a screen. I have read journal articles off my phone; bad idea.

        I even broke my own rules when read George Selgin’s Less Than Zero off of my phone.

      • I once read Michael Lewis’s book “The Undoing Project” on Google Play (I had a credit) and hated not being able to make notes on the margins!

      • That’s a valid concern. For me, it absolutely kills my eyes. At the beginning of the pandemic I subscribed to the Independent review cut down on my screen time. Last year I opted to give Regulation Magazine a spin.

        Not sure how I am going to proceed this year regarding print publication wise. I have looked into the Austrian and Public Choice journals through Springer, but I found them to be a little too expensive for my tastes.

        That’s why I do like the publications through Cato ( Last year I also purchased a single copy of the Cato Journal from the local Barnes and Noble) and the Independent Institute, they are still informative and scholarly; but also are reasonably priced and concise.

      • Additionally, you can often find a lot of good Austrian, Public Choice, and other journal articles for free on Google Scholar.

      • I look on google scholar, more a matter of incentivizing myself to decrease my screen time.

  2. This year I think I may just focus on independent studies, using google scholar. Some of the best articles I have found were via google. But I have learned a lot of general info from following print publications. Either way.,, this layperson is trying!

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