One of the techniques economists learn in game theory is recursion. If a given sequence of moves leads inexorably to defeat, it’s necessary to work back to the last decision point at which defeat can be avoided, and change the move at that point. Players of real games such as chess learn the same thing by experience.

Given the critical nature of Blix’s report on Iraqi compliance (not as critical as the initial reports made it out to be, but critical enough) and intense pressure from the US, my guess is that in the absence of some move from the Iraqi side, the UNSC will pass some sort of resolution in the next few weeks that will include a declaration that Iraq is in ‘material breach’. If so, a US-led invasion will ensue shortly thereafter, presumably leading to a very bad outcome for Saddam Hussein.

Applying standard game theory, this analysis implies that ‘Do Nothing’ is a fatal move for Saddam, and, on his past record, it seems unlikely that he will take an obviously fatal move. The options that seem potentially better from his viewpoint are
(i) backing down on the issues raised by Blix – U2 flights, scientist interviews, documentation on what happened to missing weapons etc
(ii) recanting the December declaration, admitting he has weapons and destroying them
(iii) accepting an offer of exile

I’ll look at these options in subsequent posts. For now, I’ll consider why Saddam might do nothing. Perhaps he’s confident of beating the US in a war. Alternatively, the regime may be so tightly tied to WMDs that giving them up would lead to Saddam’s immediate overthrow. Finally, he might prefer death to dishonorable defeat. In any of these cases, he’s crazy enough that the case for war is a good deal stronger.