Posts Tagged ‘fiscal cliff’

Fiscal cliff and Kantian equilibrium

The fiscal cliff is the Nash Equilibrium [NE] is the best the Democrats can do given the reaction of the Republicans; they will debate big ticket items on spending asnd taxes but both know that neitherparty wants to go there  –  but it will happen if there is no compromise, according to game theory. The NE is often best understood as a ‘trap’ to avoid, but you can only avoid it, if there is compromise, and we can only compromise if I trust you and you trust me! The ethical dimension to this can be found in the answer to ‘who will compromise first’, that is, fulfil duty and take responsibility to find a Kantian equilibrium; the Kantian sequence could be observed….Move A:  I move first, then you follow: Move B: you move next and then I follow..Move C: we both observe each other as ‘taking responsibility’…How either party moves in the sequence and thus ‘fulfils duty’ depends on what each party believes the other will do…you might just be about to read these signals in the US.