The Predictioneer’s Game: Using the Logic of Brazen Self-Interest to See and Shape the Future

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BOMBS AWAY

WE NOW UNDERSTAND the basic principles of game theory. That’s all well and good, but how do we use these principles to solve the big problems of our time? Well, let’s not mess around—let’s take a look at North Korean disarmament.

Being born in North Korea pretty much ensures having a miserable life. The average North Korean has to work an entire year to earn what an average American, Irish, or Norwegian worker makes in around four days. Money isn’t everything, but it is a pretty good first-cut approximation of quality of life.

Of course, being born in North Korea is not always bad news for everyone. Kim Jong Il, that country’s “Dear Leader,” seems to do very well indeed. He is estimated to be worth around $4 billion. That’s about one-third of North Korea’s annual gross domestic product. (Poor Bill Gates, his wealth is only about 0.4 percent of the U.S. gross domestic product.)

Kim’s wealth, womanizing, heavy drinking, and gourmand tastes incline many to think of him as an inconsequential, even frivolous, lightweight dictator. He is frequently described as irrational, erratic, and dangerous. Most assuredly he is the last of those, but irrational and lightweight—I think not. Sure, he came by his position the old-fashioned way—he inherited it (on the death of his father, the “Great Leader,” Kim Il Sung). Still, that was a long time ago. No fool stays in power for years on end when there are so many generals, sons, and wives waiting in the wings to launch a coup.

Kim Jong Il is a savvy, skillful, vicious demagogue. If he is erratic it is because it serves his interests. While we might be inclined to laugh at this seemingly odd little New Age dictator, he cleverly maneuvers within the limitations of the miserable cards he’s been dealt to make himself a menace on the world stage. All the while that he engages in fomenting terror at home and abroad, he continues to rule a country that he and his father made dirt poor.

When Kim came to power in 1994, North Korea had virtually nothing to sell in the world. Its stature was about as low as it could get. So miserable has he made life in North Korea that many of its hapless citizens have been reduced to eating tree bark. Maybe as many as 10 percent of these poor souls, while taught to revere Kim Jong Il as a god, have died from starvation in the last decade. Yet today, North Korea is on everyone’s radar screen. Why? Because while there is hardly an economy to speak of, there is the business of missile and weapons development that Kim has carved out to remarkable success. His people may starve, but he has put the money he takes from them to work, turning North Korea into a nuclear menace. His potential to launch nuclear-tipped missiles surely provides food for thought for the world even if he puts no food on the average North Korean’s dinner table. Sure, Kim’s government is reviled in almost every corner of the globe, but just about everyone takes notice. They didn’t a couple of decades ago.

Today, the governments of the United States, China, Russia, Japan, and the Republic of Korea try to work out how to bring Kim Jong Il’s rogue state into the mainstream of international affairs. For years he was threatened, he was coaxed, he was urged to be better, but he also was rewarded by Bill Clinton, at Jimmy Carter’s behest, in the hope that North Korea’s behavior would improve. The rewards Kim’s regime got—in the form of foreign aid, technology transfers, and food relief—came with little or no genuine commitment on Kim’s part, just empty promises. More recently, the six-nation talks seem to have made progress. The task of diminishing his threat appears to be moving forward, although in fits and starts. Finding a path to resolving his nuclear threat can be, and perhaps has been, advanced by accurate predictions and engineering aimed at getting Kim to put his bombs away.

In early 2004 the Department of Defense hired me as a consultant to investigate alternative scenarios for trying to get North Korea to behave better on the nuclear front. I can only sketch the solutions I came up with here, but even so, we can see how to think about such issues. I will focus attention on the scenario that held out the greatest promise for solving the problem. This scenario looks at trade-offs between U.S. political and economic concessions in exchange for North Korean concessions on the nuclear front. Before delving into details, however, let me be perfectly clear that I am taking and seek no credit for whatever progress may have been made. Policy consultants almost never know whether they are being listened to. They almost never know what other sources of advice are being heard or what those sources are saying. All I can do is report what my analysis showed and relate it to what eventually happened.

What kind of information is needed to make reliable predictions and tactical or even strategic recommendations? First, of course, it is essential to define the questions for which we want answers. A question like “How can we get Kim Jong Il to behave better?” is too vague. We need to define the objective more precisely, and we need to know the range of choices that Kim and his government can undertake. In this case, the choices included the possibility that Kim and his regime would refuse to negotiate about nuclear weapons at all; would negotiate but then cheat on any agreement as soon as doing so became advantageous (Kim’s preferred approach); would slowly reduce the extent of North Korea’s nuclear program in exchange for different levels of U.S. economic and security concessions; would eliminate the program conditionally (with various gradations of conditions having been specified); or would eliminate the nuclear program unconditionally (the most preferred outcome from the perspective of the American president and his foreign policy team).

Next we want to know what background conditions should be imposed on the question. For example, we might ask which of the above policies Kim Jong Il could be induced to adopt if the United States publicly targeted nuclear-tipped missiles at North Korea, or if the United States guaranteed North Korea’s security within its borders, or a host of other possibilities. Each condition defines a scenario so that we can compare what is likely to happen if the United States (or some other government) takes this or that action. This way, we start to answer “what if” questions. Once the issue, the options, and the scenarios are defined, then only a very few facts and a bit of logic are needed to identify solutions.

First, the facts. In my experience, all that is necessary to make a reliable prediction is to:

Identify every individual or group with a meaningful interest in trying to influence the outcome. Don’t just pay attention to the final decision makers.

Estimate as accurately as possible with available information what policy each of the players identified in point 1 is advocating when they talk in private to each other—that is, what do they say they want.

Approximate how big an issue this is for each of the players—that is, how salient is it to them. Are they so concerned that they would drop whatever they’re doing to address this problem when it comes up, or are they likely to want to postpone discussions while they deal with more pressing matters?

Relative to all of the other players, how influential can each player be in persuading others to change their position on the issue?

That’s all you need to know. That’s all? you might ask. What about history? What about culture? What about personality traits? What about almost everything else that most people think is important to know? Knowing all of those things would be great, and I will say more about them in a moment, but none of that information is crucial to making correct forecasts or to engineering policy change. Sure, it helps. It is generally better to know more than less. Still, anyone who does not put together information on the four factors I listed above is unlikely to assess a situation correctly.

What’s interesting about the four pieces of information that I contend are crucial is that while they’re not the kind of stuff that can be easily looked up in a book, it is possible to tease such information out of articles in The Economist, US News & World Report, Time, Newsweek, The Financial Times, The New York Times, The Wall Street Journal, and from Internet stories and other news outlets. Understanding the availability of such information, and having the confidence to employ it, is a big part of predicting and engineering outcomes. Admittedly, it is a lot of work going through so many news sources, and for problems with a short fuse, that approach can take too long. Luckily, there is a more efficient way to get the information—ask the experts. It’s that simple.

Experts have invested years in learning a place’s culture, language, and history. They follow the intimate political details that go on in the area they study. If anyone knows who will try to shape decisions, how influential those people can be, where they stand, and how much they care about an issue, it is the experts. Come to think of it, isn’t knowing this information what it means to be an expert?

About now you might wonder, if the experts know the information needed to make predictions, what do we need a predictioneer for? Here is where specialization of skills is really important. It’s important to remember that experts alone do not do nearly as well at anticipating developments as do experts combined with a good model of how people think. A declassified CIA study reports that my forecasting model has hit the bull’s-eye about twice as often as the government’s experts who provided me with data.¹ I certainly don’t know more than they do about the countries or problems they study. In fact, I often know no more than what they tell me. But they’re not experts on how people make choices, because that, after all, is not the focus of their knowledge.

With all of the information we collect in order to predict and shape outcomes, computer modeling is necessary both to organize the data and to run simulations of negotiations or exchanges. Think of these simulations as a game of chess in many dimensions, in which the computer calculates everyone’s expected actions, taking anticipated responses by everyone else into account. The computer has a tremendous advantage over experts, analysts, or the smartest decision makers when it comes to playing such a complicated game. Computers don’t get tired; they don’t get bored; they don’t need coffee breaks or much sleep; and they have fabulous memories. They are content to crunch as much information as we shovel into them.

Consider the computer’s advantage. Suppose we were examining the North Korean nuclear problem in 2004, as I was, and suppose we simplified it (which I didn’t) to consider just five players: George W. Bush, Kim Jong Il, Russia’s Vladimir Putin, China’s Hu Jintao, and South Korea’s Roh Moo Hyun (ignoring Japan for the moment). How many conversations among the parties to the talks might each of those five decision makers want to know about?

George Bush certainly would want to keep track of what he said to each of the other four and what each of them said to him. They would all want to keep tabs as well on any proposals they made and any they heard from others. That’s twenty exchanges of views right there. Certainly that is not all that any of them would want to know. Bush would be interested to know, or at least try to figure out, what Kim Jong Il might be saying to Putin, to Hu Jintao, and to Roh, and each of them would want to know about the conversations they were not directly involved in too. That’s another sixty possible discussions. And Bush might even want to know what, for example, Putin thought Kim was saying to Hu Jintao and to Roh Moo Hyun, not to mention what he thought Roh said to Hu and to Kim, and so on.

All in all, taking all the layers of information being traded back and forth among just these five decision makers, there are 120 possible exchanges or imagined exchanges (that is, 5 factorial, or 5×4×3×2= 120) to know about. Keeping track of those 120 possible offers and counteroffers that might be on the table is essential in sorting out what is best to do at any moment in a negotiation. Those 120 possible exchanges of points of view and beliefs about such exchanges are what can happen in a single round of bargaining with just five stakeholders. It might be surprising to know that a smart person can keep that amount of information pretty straight in his or her head. Keeping the information straight, however, becomes an acute problem as the number of interested parties rises.

Just adding Japan’s prime minister—the talks are, after all, six-party talks, not five-party talks—to the mix inflates the number of important bits of information six times from 120 to 720. Moving up just to ten players, the number of useful pieces of information rises astonishingly to over 3.6 million! No one—not Newton, not Einstein, not von Neumann—can keep that much information straight in his head; but of course the tireless computer can.

Alas, the computer’s great memory and excellent work habits come at a price. There is a vital gap between how experts or newspaper articles express facts and how computers ingest and digest them. Like the rest of us, experts communicate in sentences. Models talk in numbers. So part of my job is to turn sentences into numbers so that the computer can crunch away. Numbers have big advantages over words—and not just for computers. Most importantly, numbers are clear; words are vague. It’s essential to turn information into numerical values, and in fact it’s not especially hard to do.

To get a sense of how readily experts know the information needed to make reliable predictions, and to see how easily the information can be turned into numbers, try an experiment. Interview someone you think of as really knowing about your friends and family, including perhaps yourself. Pick an issue that is important to your family or friends. It doesn’t have to be about world affairs; it could be about where to have dinner, or what movie to see, or whatever else leads to disagreements. The easiest sort of issue to do as a first try is what I call a beauty contest. Say you and some friends are trying to choose between two movies. Anyone who really truly wants to see The Sound of Music (or fill in whatever first-run movie might grab your fancy) gets a value of 100, and anyone really committed to seeing A Clockwork Orange (another great old film) gets a 0. Then you should be able to rate how strongly each friend leans toward one movie or the other. Any who are truly indifferent get a 50; anyone leaning slightly toward A Clockwork Orange might be close to 50, say at 40 or 45, and so on. You or the “expert” you are interviewing need to calibrate their strength of feeling as accurately as possible. This way, movie preferences are turned into one value for each chooser—that is, each family member and/or friend involved in shaping the decision. The process is exactly the same, although the choices may be more complex, whether deciding what movie to see or addressing North Korea’s nuclear choices. Sure, the stakes differ, but once the essential facts are extracted, the process of turning stated objectives into a predicted outcome is the same.

Now estimate how eager each friend or family member—each player—is to weigh in on the decision. If you think a family member will drop what he or she is doing to discuss the movie to see, rate that person’s “salience” (variable 3 on my list) close to 100 (no one is ever really at 100). The less focused you think someone is on the movie choice, the lower the salience score. If a family member is the sort who would say, “Look, I’ll go to whatever movie you choose, but really I don’t have time to get involved in picking which one,” that’s somewhere around a 10. On the other hand, if you think a friend will say, “I’m busy right now but call me back in ten minutes,” that’s pretty high salience. “Call me back in an hour” is lower, and “Call me back next week” is much lower. With a bit of effort, it shouldn’t be that hard to calibrate how important the movie decision is to each person compared to the other decisions they have to make (not compared to each other, mind you, but compared to other things they need to do or deal with).

Finally, figure out who you think has the most influence among your friends or family members if you assume that everyone thinks the choice is equally important. Give the person credited as being most persuasive a score of 100 and rate everybody else relative to that. So if Harry is 100 and Jane is 60 and John is 40 in potential clout, and Jane and John want to see The Sound of Music and Harry wants to see A Clockwork Orange, then that means that John and Jane together just offset Harry’s ability to persuade if they all care equally intensely about choosing a movie. If Jane were 60 and John were 70, then, all else being equal, they could persuade Harry to moderate his view and give more consideration to the movie Jane and John prefer. Of course, if someone else supported Harry’s choice, that might create a strong enough coalition to defeat John and Jane. The dynamics get complicated, but the basic idea should be straightforward.

It’s important to note that most of us make these assessments of interests in any situation. We just do such calculations naturally with relative judgments of where people stand on a given issue. What I’ve sketched above is simply a formalization of that natural process—which becomes all the more needed the more complicated the problems in question become.

By now you are probably thinking, Sure, people can fill in numbers to the questions, but it’s just guesswork. Ask two experts the same question and you’ll get two different answers. Guess what—that’s not true. If it were, then there is barely any chance that a model like mine could achieve any consistent accuracy. There would be too much luck involved. In fact, the CIA has checked out the risk that different experts give greatly different answers leading to greatly different predictions. They found little variation in the predictive results from the sort of modeling I do, even when the people asked had dramatically different access to information. Academic experts, for instance, generally do not know the classified information that intelligence analysts have access to. Yet both groups tend to provide data so similar, wherever it’s from, that the results hardly change when moving across these experts. Even more surprisingly, the answers often don’t change much when the inputs for the computer model are put together by undergraduate students with no expertise at all.

Once I was teaching an undergraduate class at the University of Rochester while also investigating how best to get Ferdinand Marcos to resign as head of the Philippine government and create an atmosphere ripe for a free election in that country. William Casey, then Ronald Reagan’s director of intelligence, asked me to study this problem, and I was locked in a (cold) lead-lined vault at CIA headquarters to do it. I had access to classified information, but was not even allowed to read my own report when it was finished. The report was for the eyes of only the president, the vice president, the secretaries of state and defense, the national security adviser, and a few others. Meanwhile, my students worked on the same problem and were given access to the computer program I had developed to help solve such problems. They extracted the required information from magazines such as The Economist and newspapers such as The New York Times and fed their data into the computer. Ninety percent of them arrived at the same conclusions I reached in the lead-lined vault, and those conclusions about strategy proved to work rather well. This should tell us that the information needed to make good predictions is not terribly exotic; it does not require years of learning some other country’s language, history, and culture, although all of that is a big help. It should also tell us that a lot of classified information is easily reproduced from open, public sources for those who are willing to work at it.

Now that we have an idea of where and how to find our information, working out how to get what any given player wants is the key to generating predictions, and ultimately to engineering outcomes. Since everyone involved in a given problem is concerned with getting what they want, their behavior and choices are predictable. Each and every one of them will act so as to lead to the attainable outcome that is closest to what they want, given what they believe about the situation.

What might people’s goals be in a generic sense? Whatever the specific issue, I always operate under the assumption that everyone wants two things when making a decision (although different people weight those two things differently). One thing they want is a decision that is as close as possible to the choice they advocate. The second thing they want is glory—the ego satisfaction that comes from the recognition by others that they played an important part in putting a deal together.

Some people care so much about getting credit for putting an agreement together that they’re willing to shift their position dramatically if that will help promote a deal. Others prefer to go down in a blaze of glory, backing a losing position rather than making concessions that would make a deal feasible. Everyone shares these two goals: get their preferred outcome, and get credit for any outcome. Different people value one or the other differently, and so they’re willing to trade away returns on one dimension to get better returns on the other.

Let’s return to the North Koreans. After interviewing experts and compiling research, we know three important pieces of information about each player: what they say they want, how much they care, and how influential they can be. In the case of North Korea, the range of policy choices is depicted in figure 4.1, both in terms of substantive meaning and numerical value. (One easy way to get numbers out of policy stances is to ask experts to make marks on a line for several policy options, emphasizing that they should be spaced to reflect how close or distant the choices are substantively from each other. Then a ruler can be used to measure the distances, and voilà, a simple numeric scale has been created.)

My 2004 study of North Korea identified more than fifty players in this complicated international game. Two, Kim Jong Il and George W. Bush, had a veto, which meant that no deal could be struck without their support. Kim Jong Il’s preferred position was to agree to a deal but to structure it so that he could cheat later, reneging on his promises (10 on the scale). According to the experts, Bush wanted the unconditional elimination of North Korea’s nuclear program (100 on the scale). Without some strategizing, then, the two sides were unlikely to reach agreement, since the two most important decision makers were miles apart and both were thought to be reluctant compromisers. Yet a first approximation of the likely outcome suggested strong support for a consequential reduction in North Korea’s nuclear capabilities accompanied by significant U.S. concessions, including security guarantees for North Korea and considerable foreign economic assistance. How did I arrive at that inference?

FIG. 4.1. North Korean Issue

The information collected about each player in the North Korea game—their position on the issue, their salience for the issue, and the clout they could bring to bear—allows us to see how much power there is behind each possible outcome. Potential influence, one of the three pieces of information, tells us how persuasive each player could be, but not how persuasive each is. That depends on their willingness to apply their influence to the problem, and that in turn is determined by how salient the issue is. So we can define a player’s power—the pressure they really exert to shape the outcome—as equal to their influence multiplied by their salience.

Using that information, we can formulate the first of two pretty reliable first cuts at a forecast (ignoring vetoes for now). Figure 4.2, on the next page, shows the distribution of power in support of each of the major policy stances on the issue scale. Think of it as showing how much power backs each option. It is like a map of mountainous terrain, with the positions garnering the most powerful support forming high, prominent peaks, and the positions with little support amounting to not much more than molehills. This picture of the power terrain is based on the answers to the questions posed to the experts about position, salience, and potential influence.

We can extract two insights from figure 4.2 that can help us predict if we are looking at a purely international political decision (which we are not). First, there really isn’t that much clout supporting North Korea’s nuclear program. None of the positions that favor North Korea’s keeping a nuclear program are backed by a really large amount of power. Second, piling the mountains of power one on top of the other as we move across the spectrum of choices, we discover that the pile does not reach a majority of all the power until we get to the position designated as “Eliminate Nuclear Programs / U.S. Concessions.”

Since we are continuing to assume, as we did back in Game Theory 101, that stakeholders prefer positions closer to their own to positions farther away, our first first-cut prediction is “Eliminate Nuclear Programs / U.S. Concessions.” Why? Because if it takes a majority of power to enforce an outcome, then the winning position is the one for which the total of power to the left of it is less than 50 percent and the total of power to the right of it is also less than 50 percent. The only position for which that is true is “Eliminate Nuclear Program / U.S. Concessions.”²

FIG. 4.2. The North Korean Nuclear Power Landscape

This prediction has some important limitations. For one thing, it ignores vetoes. Since it is not even close to Kim Jong Il’s desired outcome (and is not all that close to the United States position either), we can be confident that North Korea will reject it unless there is sufficient political pressure on Kim Jong Il to get him to change his position. So we see we really must think through not only the international aspects of the issue but also the domestic dynamics in North Korea. To be sure, we need to work out whether it is possible for foreign stakeholders (like the U.S. president or the South Korean president) to change Kim’s mind. But we also have to analyze the internal political pressure Kim might face if he resists or if he concedes the proposed solution by outsiders. These are some of the things my computer model does that are difficult to do in our heads.

We can look back at the information we collected from experts and assemble a second preliminary prediction. Again we will have to be mindful that we are ignoring the possibility of vetoes for the moment, as well as the dynamics that lead players to alter positions in response to credible threats and promises.

Rather than just look at the 50 percent break point in the power landscape, we can apply a different method to arrive at a sensible preliminary prediction. Let’s multiply the influence of each player (calling influence I) by his or her salience (S) and multiply that result by the numerical value of the position each player advocates (P), then add those totals up for all of the players and divide that total by the sum of the influence times salience for each of the players (sum of I x S x P)/(sum of I x S). Now we have computed a value called a weighted mean. This is, roughly speaking, an average of what people, with their influence and commitment to a given issue taken into account, want. With the answer to this calculation in hand—it is 59.8—refer back to figure 4.1. There we see numerical values associated with possible solutions to the issue, and so we can see that 59.8 is equivalent to the position designated as “Slow Reduction, U.S. Grants Diplomatic Recognition.” The details behind the calculation leading to this prediction can be found in the first appendix.³

Now we have two first-cut ways to predict what is likely to happen. Taking the two together, we can be fairly confident (still ignoring vetoes) that the solution to North Korea’s nuclear problem lies somewhere between the initial, majority-power approximation (about 80 on the issue scale in figure 4.1) and the weighted mean position (60 on the issue scale). That easily, we have created pretty reliable initial forecasts for this issue—a narrow range within which a resolution is likely to be found if no one exercises a veto. The initial forecasts mean substantively that at the outset there was a possible resolution supporting a slow reduction in North Korea’s nuclear capability followed by U.S. diplomatic recognition of the Democratic People’s Republic of Korea. I will say more about that in a moment.

The really simple power-majority view coupled with the slightly more complicated weighted-mean view offers a good answer to the range of likely agreements, but they do not result in the best prediction possible. That takes a computer program to calculate the solution to a game in which players make policy proposals and try to exploit each other’s egos to alter stances, climb over or reshape the mountains of power that lie in their way, and get the outcome they want. Still and all, there’s now enough information to make a pretty reliable prediction. This baseline forecast is likely to be right around 70 to 75 percent of the time.⁴

Take a look back at the hills and valleys in figure 4.2, remembering that we are looking at the lay of the land in 2004. Doing so helps us understand that being really powerful does not assure success. The tallest mountain, the biggest mass of power, supports the idea that North Korea should completely eliminate its nuclear program in exchange for concessions. That mass of power supports an outcome around 80 on the issue scale (figure 4.1). This was not Kim’s point of view, it was not Bush’s point of view, and it also was not the weighted mean power’s point of view. That mean power perspective, located at the position labeled “Some Reduction /U.S. Recognition,” actually had the smallest bloc of power behind it. Although not supported by many, it was nevertheless the position around which an initial compromise might most easily have been constructed. That means that in 2004 one of the first-cut predictions included the prospect that North Korea could be induced to reduce substantially, but not eliminate, its nuclear capability in exchange for significant U.S. concessions, including perhaps even diplomatic recognition and certainly including consequential foreign aid (not shown on the figure).

Of course, this forecasting method doesn’t tells us how to get Kim Jong Il and President Bush to agree to the position it represents or to some other result that could be successfully negotiated. That’s where game theory comes in. Still, it is interesting to realize that, except for working out how to get Kim and Bush to agree to this result, we now have, with one of our baseline forecasts (and the forecast that ultimately came out of the computer-simulated game), a prediction, made in 2004, that is very close to the actual deal struck between the United States and North Korea in 2007.

Let’s think now about the game theory side to see the logic that produces a successful result and to get at some of the nuances of that result. For starters, we should notice that although North Korea is often portrayed in the media as a closed society, a mysterious place about which we know very little, the truth is that there are plenty of excellent experts in universities and elsewhere who know a lot about North Korea’s government and its leaders. I interviewed three experts, two together and one separately, and they came up with quite reliable information even though they disagreed about what they thought would happen in the so-called six-nation talks. As I intimated earlier, getting the data is not that hard. The more difficult question is how to frame the issue so that we answer the right question.

A good approach to solving problems such as presented by North Korea’s nuclear program begins by asking why that country’s leaders would want to develop nuclear weapons in the first place. We can think of that as asking, “What are they really demanding in the international arena?” The superficial answer might be to say that they want to threaten the Republic of Korea or American interests in the Korean peninsula. That may have merit but is unlikely to provide the whole answer, or even the main answer. I believe a good place to examine any provocative policy is to ask how that policy affects the prospects of political survival for the incumbent leadership that is engaging in provocation. Remember, this is human nature we’re talking about.

Kim Jong Il knows what it takes to retain the loyalty of his military leaders and to keep rivals at bay for years on end. He knows whom to antagonize and whom to placate. He certainly understands that he couldn’t defeat a concerted effort by the United States or South Korean governments to overrun North Korea and overthrow his government. But he also understands that he could raise the price of an invasion sufficiently that such an effort would be too costly to consider. In that case, by building a nuclear weapons capability he diminishes or even eliminates the most significant foreign threat to his political survival, freeing himself to concentrate on managing relations with his military leaders, party elites, family members, and senior civil servants. They, of course, could form various coalitions that might threaten his hold on power. Keeping them happy must be a primary concern for Kim Jong Il.

If personal political survival is Kim’s main concern—and I believe that this is every leader’s top priority—then it’s likely that there never was an intractable contradiction between his interest in sustaining himself in power and the United States’ interest in eliminating any nuclear threat from North Korea. That means all that we had to do was find a self-enforcing approach that provides real commitments on both sides and advances both the elimination of North Korea’s nuclear threat and external threats to Kim Jong Il’s political survival. That was the strategic problem as I saw it in 2004. My investigations painted a picture of Kim Jong Il as an astute politician whose primary interest in nuclear weapons was as a lifeline to staying in power. Looking at several simulations of his strategic interplay with other powerful North Koreans also made evident to me that he is less monolithic a leader than is sometimes thought in the United States and that he was, and remains, more open to compromise than is generally assumed. What, in 2004, did I contend such a compromise might look like?

I concluded that his demand really was “Assure my security against a foreign invasion.” Therefore, the counterdemand had to relate to assuring us that his nuclear threat became moot in exchange for our ensuring his political survival. This meant turning attention away from just threatening Kim to finding a way to make his interests and the international community’s interests compatible. Thinking through his interests as well as the interests of others, it becomes clear that any successful compromise requires that the international community be assured that as long as it does nothing to jeopardize Kim’s political survival, he will do nothing to jeopardize peace on the Korean peninsula or beyond.

In practical terms this meant that the United States directly, or through third parties, needed to guarantee, and I mean really guarantee, not to invade North Korea. The United States also needed to guarantee a sufficient flow of money—we will call it foreign aid—so that Kim Jong Il’s key domestic backers would be assured of receiving substantial personal, private rewards from him. These rewards include money that could go to their secret bank accounts in return for their political loyalty to him. In return for his assured security and for a steady flow of money, the North Korean regime needed to provide a verifiable means of ensuring that its nuclear weapons program stopped. Assurances of his security would most likely come in two forms: formal, explicit Chinese guarantees to defend North Korea, and public American promises not to attack it. Making these guarantees public is critical, because secret assurances are just cheap talk. They are easily violated without imposing political costs on the guarantor who reneges. As for the assurance of a steady flow of money, we are probably talking about as much as $1 billion per year for as long as Kim Jong Il’s regime survives. That may sound like a lot, but think about how much was spent every day in Iraq for years on end, and at what additional price in American, allied, and Iraqi lives, and you’ll see that $1 billion a year is small potatoes.

There is plenty about such a deal that is distasteful. Bankrolling such a horrible human being is no happy task. It would be ever so much more satisfying if we could just persuade him to do the right thing, but then Kim Jong Il wouldn’t be Kim Jong Il if that were feasible. Exactly because he is so horrible, it is important to figure out how to keep him from unleashing a nuclear war in a fit of pique or fear or resignation that he is through anyway and so has nothing to lose. Remember, my task was to find what would work. The desirability of making it work is what we elect leaders to decide.

I want to emphasize here that I have said “a verifiable means of ensuring that its nuclear weapons program stopped.” I have not suggested that North Korea’s nuclear weapons program and enrichment facilities be eliminated (positions 80 and above on the issue scale in figure 4.1) or dismantled. This is of fundamental strategic importance in making an agreement credible from both sides—so let me explain what I had in mind.

In the event that the United States or the other participants in negotiations with North Korea insisted on dismantling that country’s nuclear capabilities, I believe agreement would have been impossible or would prove short-lived, leading to inevitable cheating. Dismemberment of North Korea’s nuclear capabilities as an approach overlooks the essence of Kim Jong Il’s interests. It fails to put ourselves, as any good strategic thinker must do, in his shoes, looking at the world from his (perhaps elevated) perspective.

If he dismantled his nuclear capabilities, he would no longer have a credible threat of restarting his weapons program quickly in the event the international community—especially the United States—reneged on its promises. In such an environment we can be confident that the international community would renege, and, anticipating that, he would never allow his weapons program to be dismantled. After all, once his nuclear threat was completely dismantled, hardly anyone would have any remaining reason to follow through on payments to him, payments that help him keep domestic as well as foreign rivals under control. The international community would have even weaker reasons to leave him in power. They would rather replace him with someone more amenable to their wishes once his threat to use nuclear weapons to defend his regime was no longer meaningful. Remember, game theory takes a dim view of human nature, and that includes our nature as well as his. However high-minded we think we are, we would have scant incentive to continue to pay Kim Jong Il to behave well once his ability to behave really badly was eliminated.

Thus, as long as his nuclear program is stopped, disabled, placed in mothballs, with inspectors on site at all times, and not dismantled, he has the ability to restart it if the United States or others renege on payments or security guarantees. Conversely, as long as the United States and others do not renege on payments and security guarantees, he has no incentive to throw out the inspectors and restart his nuclear program. It will have achieved its purpose of giving him a life preserver. His likelihood of extracting a higher price in the future by throwing out the inspectors must be balanced against the realization that if he proves untrustworthy there are alternative solutions to the problems he represents—alternatives he wants to avoid. These alternatives, of course, would need to be and could be acted on (and here is where U.S. interests in acting and South Korean interests in avoiding the possible consequences of such action differ enormously) before he recommissioned his nuclear capability.

So we can see that money and security guarantees for disabling, but not dismantling, Kim Jong Il’s nuclear program create a self-enforcing mechanism. Neither side would have an incentive to renege on its part of the bargain. It is a deal that reinforces each side’s interests. It is the deal that was struck and that, with minor tweaking and continuous jockeying for position, is likely to succeed.

So that is how simple it is to negotiate a nuclear arms agreement! Just find experts, collect the necessary information, use the computer to discover the impediments to the desired outcome, and work out how to neutralize the impact of those impediments by finding actions that serve the interests of the rival parties. With the help of the computer, we were able to see that neither George Bush nor Kim Jong Il was going to budge on his own. Since they were the two decision makers with the authority to say no to any deal, we had to find a way to overcome their intransigence. To do so, we used the computer model to test the likely effects of alternative degrees of American concessions to evaluate their likely influence on Kim Jong Il’s approach to the negotiations. We found that security guarantees, especially a mix of assurances from the United States (not to attack) and from China (to defend North Korea if necessary), coupled with significant economic assistance (approaching $1 billion or so per year) to North Korea, would induce Kim to mothball his nuclear capability and allow continuous on-site inspections and securing of his nuclear facilities. Thus, we saw that we could move him into the range of 60 to 65 on the issue scale, and that George Bush could accept this compromise as well, and—poof!—using the me-first principles of game theory we examined in Chapters 2 and 3, we saw the path to a settlement that could indeed be both predicted and engineered.

We’ve seen now that it’s possible to employ this science in nudging North Korea to alternative strategies. But how does this tool really work in the rest of the infinite world of human interaction and conflict? How must we change our base thinking to work out any variety of predictions and, especially, to change the future?

It is indeed my claim (and part of my livelihood) that outcomes of very big problems with many, many players can be systematically predicted and engineered, but, as you may have noticed, it all starts with asking the right questions. The next chapter will examine what those questions might look like across a wide variety of issues from the worlds of business and foreign affairs.