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A Game of Theory: Economics in Television


Christine Li

By

April 7th, 2013


On the back of the season three premiere, Christine Li explores how A Game of Thrones is really a multiplex system of game theory


In our study of economics, it’s not usually too hard to find real life examples of the theories found in textbooks. No other time was I so gleefully reminded of this than when I sat back to watch the third season premiere of the HBO series Game of Thrones this week.

For the economics minded, some questions are open for thought: is the Realm in equilibrium? Are the characters always rational? Should they cooperate or ‘defect’? For everyone else, this might be a fun (read: nerdy) way to think about the economics concepts lurking in our favourite medieval setting.

More than anything, Game of Thrones is a multiplex system of game theory – especially in the secretive chambers of King’s Landing – where we see a series of strategic games or scenarios played out by almost all of the characters.

In fact, each of the four main Houses has their own economics dilemmas to face.

Spoiler alert: Do not proceed if you haven’t seen Season One and Two and still want to. 

Lannisters

Let’s start off with the Lannisters, my favourite dysfunctional family. The Rineharts of Westeros, Lord Tywin Lannister and his privileged offspring make up the 1%. Given to blind nepotism, the Lannisters form a powerful lobby group that dominates realm politics at the top.

Corporate responsibility is somewhat guaranteed by the motto ‘Lannisters always pay their debts’, and their prime credit rating in part helps Tyrion Lannister secure a loan on his life in the Eyrie’s Sky Cells. 

How does the rest of the family fare? We turn to the Lannisters’ interactions with other players.

Starks

Lord Eddard ‘Ned’ Stark might be the most sensible patriarch of Season One, but he is by no means a role model in rationality.

Recall when Ned discovers the incestuous parentage of Prince Joffrey. As the Hand, Ned Stark gives Queen Cersei an ultimatum: flee into exile or be punished by King Robert, as he will spill to Robert when he returns from the hunt. Ned Stark obviously doesn’t know how to play the game (of theory) as it is his irrational sense of honour and decency that guides him to deliver such a warning. Why is this so irrational?

Let’s take a look at the predicted outcomes when Ned warns Cersei of his exposé.

A simple game tree is all we need to tell the story. Ned moves first, followed by Cersei. The ‘branches’ represent possible moves made by either player, for example ‘to warn’ and ‘don’t retaliate’. On the other hand, ‘nodes’ or ‘leaves’ indicate the player whose turn it is to move, and the final nodes show the expected pay-offs if we follow the moves through.

got

By a process of backward induction, or what economists call ‘rollback equilibrium’, we can look at the payoffs to predict whether the last player to move, Cersei, will retaliate or not. In this scenario, Cersei’s only guarantee of safety is if she retaliates, meaning certain danger for Ned. The only way Ned could be safe is if Cersei thought being in exile was a nice idea, but let’s face it this is a naïve hope at best.

Knowing that Cersei’s best move is to retaliate, Ned should not warn Cersei and instead just expose the truth. (What we all knew without economics).

Targaryens

There is but one decision facing the only Targaryen left by the end of Season One, and it is a financial one: Should Daenerys Targaryen return to Westeros to reclaim the Iron Throne, her birthright?

Without bringing in the accountants, this is clearly a question of economic costs, namely sunk costs versus opportunity costs. Budding economists learn that when making decisions, one should ignore sunk costs and only take into account the opportunity costs of their decisions.

For Dany, the sunk costs and opportunity costs can be tabulated as follows:

Sunk Costs Opportunity Costs
Murder of her family Westerosi army (8000 men)
Being sold to Khal Drogo Dragons
Death of Khal Drogo Sailing across the Narrow Sea
Losing her khalasar and home Defeat and slaughter (maybe)

Does it matter that her House’s claim to the throne has already cost her the lives of her family? Should she think about her homeless, husbandless predicament before sailing to Westeros? The answer is no. She should however, toss up between costs facing her now.

Baratheons

Corporations are weakened by internal fractures and fiscal irresponsibility – a monarchy is no different. More than that, the Baratheon rule is characterised by ‘incumbent inertia’: complacency from enjoying control of most or all resources (experienced by some real world technology firms[1]) and not meeting the needs of the Realm.

By the time of his death, Robert had authorized innovation in subject morale at the expense of the Treasury, was prone to extravagant and unsustainable expenditure, and sluggish in responding personally to crises. To add fuel to fire, the Realm was wracked by rampant corruption and spiraling debt.

An impervious and reluctant ‘CEO’, King Robert’s rule was sure to be short-lived in a competitive market.

Jon Snow and the Night’s Watch

The Night’s Watch faces the wintry problem of labour supply.

Jon Snow, an economic migrant of sorts, finds himself an outlier in a workplace of predominately unskilled labour. The Watch is barely one thousand strong; an all-time low while the demand for Sworn Brothers has never been greater to defend the realm from the White Walkers, if Winter is indeed coming.

A ‘glorified penal colony’[2], the Watch suffers from an image problem that might benefit from a more aggressive marketing strategy.

As a potential candidate for Lord Commander one day, how might Snow relax ‘workplace’ laws to attract more Night’s Watchmen?

Maybe they could set up a minimum wage. Or allow women to take the black.

 


[1] Hill, C and Rothaermel, F ‘The performance of incumbent firms in the face of radical technological innovation’

http://scheller.gatech.edu/directory/faculty/rothaermel/pubs/03AMR.pdf

The views expressed within this article are those of the author and do not represent the views of the ESSA Committee or the Society's sponsors. Use of any content from this article should clearly attribute the work to the author and not to ESSA or its sponsors.

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