US - Politics and Game theory. It doesn't get any simpler than this.

For anyone who has any doubts about the merits of considering politics in terms of game theory should look at the debt ceiling negotiations. If one or the other political side backs down on their demands, the opposite side gets a considerable "win". If neither side backs down in time, everybody loses.

Classic Game of chicken.

The most important thing to consider is why people play this silly game when the livelihoods of millions of people are at stake? The first question is why do people play chicken when their own life is at stake?

Obviously the perceived political rewards are so huge in having the opposition back down in humiliation.

My hope is that if one side or the other backs down, that they get rewarded at the ballot box rather than punished - Hopefully changing the political perceptions for next time. I don't hold out much hope.

Wow. "Unpopular" tax reform with a hung parliament

One thing that tends to characterise hung parliaments or even non-traditional coalitions in most countries is their ability to only pass popular spending sprees and not the unpopular new taxes (or more correctly, tax reform) that are possible with clear parliamentary majorities.

This is clearly not the case in Australia. Whether for or against a Carbon tax, one has to admit that it is bold, given the popular opinion of the moment.

The thing is, that the idea is to reduce CO2 at the *lowest* cost, which is still putatively an aspiration of a reduced majority. The Europeans have active policies that don't work, and the US has failed to pass legislation that wouldn't work anyway.