What is Politics subset of human behavior that involves the use of power or influence change in status quo imagine a band on firearms etc what can you do as an individ ual a citizen 1 2 3 Voice a complaint protest disobedience legal action lobbying Exit Loyalty Game Theory a tool for analyzing strategic situations a situation where the choice of one actor depends on the choices made by the others in Game Theory players or actors always do what s in the best interest what ever results in the highest payout Extensive Form Games players take turns making decision Normal Form Games choices are simultaneous the game theory map is made of choice nodes where action is chosen branches action is taken and terminal nodes end of game possible outcomes E citizen s exit payoff 1 benefit taken from citizen by state L state s gained value from having a loyal citizen who does not exit C cost for citizen to use voice C 0 If there is a credible exit threat then 1 C E 0 If the state is dependent on its citizens then L 1 To solve the game consider these Subgame Perfect Equilibrium assume player chooses action expected to give highest payoff in each stage of the game Use Backward Induction look at payoffs see which choices were taken to get to high est List All Actions what you don t observe is often more important than what is observed Remember Thatcher results will differ if citizens don t have a credible exit threat or if the state is NOT dependent remember credible exit threat means 1 benefit maintained by citizen C cost of voice E exiting 0 no credible exit threat means 1 benefit maintained by citizen C cost of voice 0 E exiting and even to exit alone 0 C using voice still losing benefit E C using voice leaving if L 1 so keeping the benefit is more important than having a loyal citizen state is independent and there is a credible exit threat citizens leave mobile liquid assets means citizens can take their payoffs with them more likely remember that the cost of voice varies by country could be life or death some states don t depend on citizens for revenue they make enough selling oil
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