ANOTHER CHICKEN GAME—GREXIT. I have posted a number of times about negotiations which have been compared to chicken games—Greece and the European Union, the federal deficit ceiling, Cyprus and the European Union. Here is a post about Cyprus from March 2013. The Greek crisis is back after the Greek elections. Will Greece leave the European Union (the possibility is referred to as “grexit”)? I have cited Tyler Durden of Zero Hedge before for his generally pessimistic and amusing views. Here is Tyler Durden commenting on the new crisis resulting from the Greek elections. Durden quotes Ben Hunt of Salient Partners. Hunt’s point #5 is: “Greece is Bear Stearns. Italy is Lehman.”
Megan McArdle at Bloombergview describes here a common internet view of the negotiating position of what will be the new Greek government: “The Internet abounds with worthy pieces explaining that Greece would be absolutely mad to leave the euro….Of course, you can read this as a sort of elaborate negotiating tactic: Convince the Germans that you might really be crazy, in order to extract more concessions.” You can see that a new chicken game is beginning.
It may not really be chicken where the classic games are among relative equals. This sounds more like Karl Deutsch’s game of “underdog” where a desperate far weaker player, at great cost to itself, challenges the stronger player. It hopes to cause enough pain and inconvenience to the stronger to get it to make concessions that make the position of the weaker more tolerable. The otherwise incomprehensible Hamas rocket attacks on Israel seem to fit the “underdog” game. But in that case Israel typically ratchets up its pressure and the game backfires with only pain and no positive payoffs for the Palestinians.