Varoufakis knows that it can sometimes be rational to appear irrational, including proclaiming a Kantian categorical imperative to do what is right regardless of the consequences for Greece and the rest of Europe – but that only works if everyone takes it at face value.


The Melian Dialogue in Thucydides has been of interest to game theorists since the earliest development of the field; it was discussed on several occasions by John von Neumann, generally accepted founder of this approach, and it appears in the work of a leading game theorist like Thomas Schelling. It’s entirely understandable: the dialogue presents two sides in a high-stakes, zero-sum conflict, pursuing very different strategies with a limited number of possible outcomes, and – if you want to push the boundaries of game theory a bit further, it also offers interesting examples of how each side seeks to anticipate and influence the decision-making of the other, and raises some fundamental questions of rationality. I fully expect to find lots of other examples when I have time to pursue this theme in depth, but for today I want to focus on one case of a game theoretical discussion of the…

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