Rebel with a Cause: Greece’s Chicken Game

In a classic scene in “Rebel without a Cause” Jim , played by James Dean is racing with Buzz  towards a cliff, whoever jumps out first is the chicken, the looser. Jim jumps out on time, while Buzz gets caught in the car door and drops down the cliff with his car.

This scene is not only popular with movie buffs, but also with scholars. Scholars of game theory, like Yanis Varoufakis, the new Greek minister of finance. This “chicken game” is about driver’s drive towards each other on a collision course (an alternative version of heading for the cliff). One of the two must swerve, or both might die. However, who gets out of the way first is a ‘chicken’. Varoufakis in his writings about game theory uses the alternative term of ‘hawk and dove’.

Key to winning this game is to signal to the other side that you are more determined or more crazy than the other. If you are convincing, the other side will swerve first. You can signal by expressing your determination or–more drastically–by pulling out the steering wheel and giving yourself no choice but to stay on course. There are two ways in which you can loose. You can send signals that you are willing to swerve or you can forget to signal to the other that you pulled out the steering wheel and thus you precluded the option to swerve without letting the other side know. This is what happened in Kubrick’s Dr. Stranglove or: How I learned to stop worrying and love the bomb. Here the Soviet Union built a doomsday machine that would annihilate the earth if the Soviet Union was attacked, but forgot to tell the US about it.

The new Greek government is currently playing a game of chicken with the EU (while some have characterized this as a gamble, I would consider the term game, in this understanding more useful). When Varoufakis says that there is no plan B, he is telling the EU and the GFKT (group formerly know as the troika) that he and his government are not going to swerve. As a game of chicken, it is a gamble, will the other side swerve first? Greece since the elections is signaling that it will not move, but so have some key EU actors, including Germany. The gamble is that Greece has less to loose than the EU. Even if Greece would have to leave the Eurozone, the cost would be high for Germany and other countries, so there is no scenario in which Greece would be the only looser.

The current government will have only one shot at this game, and it seems to be serious about it now. While a recent comment in the FT argues that Varoufakis would be overplaying his hand, one could also see it as astrategy of brinkmanship. It also has the advantage of a clear majority in parliament and a population supporting a shift from the status quo. On the other side, the EU is a much more complicated ‘driver’. The likelihood of somebody being a ‘chicken’ seems greater here.