Behavioural Strategy: Exploring the Psychology of Strategy

by DR KENNETH PAYNE

Behavioural economics is all the rage these days. Thanks in large part to the Nobel prize winning research of Daniel Kahneman and Amos Tversky, economics has discovered some powerful insights about how humans really behave when it comes to making life choices. That is really behave, as opposed to the dominant approach hitherto, which was to assume that we were all rational, or, rather, that at least, on aggregate we would approximate to rational actors.

There are important practical implications. Richard Thaler and other economists offer the powerful insight that policymakers can shape social behaviours advantageously with a little help from psychology.  So now, Downing Street has a ‘nudge’ unit, dedicated to designing interventions that might push us in a particular direction, while still leaving us essentially free to decide.

By contrast, the policy relevance of International Relations rests on shakier foundations. There’s sometimes bemusement among military officers about the relevance of academic work in IR – what is a policymaker supposed to do with the arcane, jargon heavy writing of contemporary theorists? Behavioural economics demonstrates convincingly that the academy can meaningfully inform policy, armed with less jargon and more empirical support. And with that in mind, perhaps it’s time for some of this psychology to make its way into strategic studies.

In fact, it’s already here, and has been since Clausewitz, who understood well that strategy was a thoroughly psychological affair, and contributed some enduring ideas about how that would play out, despite the inevitable limitations he faced given the immature nature of psychology at the time. Behavioural strategic studies has moved on since then. As a minority pursuit in the IR departments of the day, it lived on as political psychology, spawning influential ideas about the importance of Groupthink in producing suboptimal decision-making, or about the propensity of policymakers to think analogically.

We need more of this. The lesson of the last half-century or so in IR is that rational actor approaches won’t cut it. Take a rather important example: The game theory that US strategists sought to apply to the real world of nuclear deterrence didn’t turn out well in practice. On paper, it looked as though one might realistically fight a counterforce war against another rational opponent, with both sides gauging their adversary’s resolve and calculating how much escalation would bring victory. Happily, when real Cold War crises arrived, in Berlin, Cuba, Vietnam and elsewhere, there was little appetite to put the theory into practice. Limited war yes; limited nuclear war, no.

And so the Vietnam war can be readily seen, as I do in my new book, as a case of rational actor theories in practice. Defense Secretary McNamara and his ‘whiz kids’ saw war as a bargaining process – a special type of violent conversation. If they could carefully calibrate the level of force being applied, then their rational adversary would back down, realizing that refusing to do so would only bring further escalation. The enemy, of course, didn’t see things that way. Later Nixon swung the other way, unveiling his ‘madman’ theory of strategic behavior, whereby the enemy would be caught off guard by a sudden, unhinged escalation of violence, in contrast to the gradualist approach of his predecessor. It was Herman Kahn’s theory of ‘escalation dominance’ applied to conventional warfare. This was a departure from rationalism in some respects – Nixon’s aim was to persuade the Communists that he was unpredictable. But he still expected them to respond rationally to the threat of dramatic escalation.

The essential problem was that real world statesman weren’t rational, at least in the sense meant by those who like to model things mathematically. They weren’t mad either, for the most part – even Nixon. Instead, theirs was an altogether human rationality – one informed by emotions, by limited attention, patchy, biased memories, and the pressures of time. And so the Americans were committed to sunk costs that they wouldn’t walk away from, constrained by their collective view of the sort of conflict they were in, prone to reductive stereotypes about their adversary and his motivations, and overly optimistic about their capacity to influence events.

For social science theorists of whatever stripe, the challenge is to find something general – a pattern, or even a tendency (let’s not be too ambitious) that can allow us to discern broader meaning in strategic behavior, away from the particular events of history. The rational actor model isn’t it, either in economics or IR. But psychology, in its various guises, provides a way of doing that. Social psychologists have long studied the effects of the group on attitudes and behaviours. Evolutionary psychologists can tell us something important about our proclivities for violence, and also for cooperation. And cognitive psychologists, via their experiments, can tell us something about the sort of biases we are subject to when making decisions: Our overconfidence and sense of agency, our refusal to consider non-confirmatory information, our flawed weighting of risk, exaggerating low probability events, and our tendency to gamble more when we think we are losing. There is plenty of work underway – including from colleagues at KCL, and more to come. Behavioural strategy is in vogue. But in truth, we don’t really need the ‘behavioural’ bit. Strategy, dynamic, complex and uncertain, is, just as Clausewitz saw it, inherently psychological.

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