By Geoff Colvin and Ryan Derousseau
February 17, 2016

For leaders and aspiring leaders in any field, I highly recommend a new article by Richard O. Lempert, an emeritus professor at the University of Michigan Law School. In it, he uses game theory to analyze the strategic choices available to President Obama and Senate Republicans as they battle over how the post-Scalia vacancy on the Supreme Court will be filled. It’s fascinating in itself, and it’s a reminder of how particularly valuable the discipline of game theory can be to any leader.

For example, here is Lempert’s dissection of one of Obama’s options, nominating a “responsible moderate” such as Merrick Garland, Chief Judge of the D.C. Circuit, a Clinton appointee:

“If Obama chooses to nominate a moderate, there is a chance that despite the Republican leadership’s expression of intransigence, the nominee would be confirmed. The situation is akin to what in game theory is called a “minimax” solution; each side minimizes the maximum loss it will suffer. Democrats see the appointment of a Justice who appears more of a centrist than they would like, but avoid the possibility of a Scalia-like replacement should a Republican win in November. Republicans see the same thing in reverse. They would prefer a much more conservative nominee, but they avoid the risk of a Justice who might side with the Court’s liberals regardless of the issue or even pull them to the left. The business community in particular might prefer the certain appointment of a Justice who could be counted on to consider and understand their side of the story before deciding, rather than risk the appointment of a Justice who shared Senator Sanders’s vision of rapacious corporations or who satisfied Clinton’s need to court the Democratic left in preparation for a second-term election.”

And this is only the beginning, Lempert discusses other factors in the “moderate” option and examines the likely dynamics of other options the president might consider.

Many leaders probably feel they use game theory all the time, even if they’ve never been schooled in it, and that is undoubtedly true. Anticipating someone’s response to our move, and then how we might respond, and what they might do next, etc., is in the very nature of human interaction. But game theory is a rich field that has been developed far beyond what most of us would imagine; many economists have won the Nobel Prize at least in part for contributions to game theory, most notably John F. Nash Jr., who won in 1994.

I can’t resist mentioning the role of two former Fortune writers in making the world more aware of game theory. Sylvia Nasar wrote A Beautiful Mind, the bestselling biography of Nash that was made into an Oscar-winning movie. And John McDonald first explained game theory to the world in a series of landmark articles in the 1950s. From that work he produced a classic little book called Strategy in Poker, Business, and War. It’s still in print, and I recommend it, along with Sylvia’s wonderful book, to anyone who hasn’t read them.

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