2nd Half of the Term Flashcards
(25 cards)
Tournament Good:
When you vie for a tournament good, you seize it or you have nothing. There is no middle ground.
Operational Effect:
Knowledge of an adversary’s intentions & capabilities can lead to the development of countermeasures to reduce the adversary’s impact.
Relative Effect:
A country’s relative advantage in intelligence over its rival.
Addition Rule for Probability:
P (A or B) = P(A) + P(B) – P (A and B)
Network Effect:
The value of a product is dependent on how many users/buyers/sellers it has – the more users a product has, the more likely new users will want to use the product.
Economies of Scale:
The more a firm produces a product, the lower the costs of production.
Macro-innovations:
New tech that are very different from existing tech. Big impact on other tech and the economy.
General Purpose Technologies (GPTs):
Important subset of macro-innovations; pervasive as inputs in many downstream sectors; increasing the productivity in R&D.
Micro-innovations:
Incremental innovation and limited scope for disruption across sectors.
Disinformation Methods:
o Pretending to be fellow citizens and locals - Creates trust effects.
o Pretending to be large numbers of people - Creates bandwagon effects.
o Pretending to be institutions or experts - Triggers authority bias.
Russian Reflexive Control:
o Step 1: Persuade people of a false or exaggerated threat.
o Step 2: Undermine people’s trust in the usual approaches to countering threats (e.g. “the government”).
o Step 3: Persuade people that there is only one viable way to counter the threat = the way that advantages your position.
How to profit by lying on digital platforms:
o Ordinary people: Get paid to create digital disinformation.
o Oligarch: Help elect politicians who will reduce your taxes and increase your economic opportunities.
o State actor: Divert or weaken other states that are interfering with potentially profitable imperial activities.
Disinformation Countermeasures:
Fraud laws, disclosure requirements, media literacy, sanctions, and offensive cyber operations.
Characteristics of Military Intelligence:
o Intelligence itself does not directly impact military capability. Military capability are impacted by the integration of intelligence.
o Intelligence involved collecting and evaluating information that is relevant to all military and government hierarchies.
o Information superiority is based on high-quality human capital and technology, which is unique to each country.
o Intelligence missions are characterized by significant uncertainty that can be reduced but cannot be eliminated completely.
o Intelligence collected by adversaries can have significant negative influence on the country’s military capability.
Evaluation Effect:
A country’s assessment of the adversary’s capabilities
Arguments for Economic Espionage?
Strategic trade policy, public good argument, police argument (counter-espionage component).
Climate Change Considerations:
Operational capability over sustainability; long-term horizons due to defence equipment lifespan; modelling economic & technology change; interoperability; logistics’ cost, and data.
Greening Defence Approaches:
Regulatory; ceremonial; competitive; and holistic.
Path Dependency and Lock-Ins:
When a design has technical interrelatedness, economies of scale, and quasi-irreversibility of investment.
Moral Hazard:
Country A cannot distinguish between these two situations:
- When a spy is putting the effort and was not able to find evidence of the new weapon, simply because the weapon does not exist
- When a spy is shirking and not finding the new weapon.
Defection Problem
- The spy is certain that the new weapon exist in country B the state is y
- Spy reports to Country A truthfully and receives a reward
- Spy can sell this information back to Country B and ask Country B to buy back that information.
- Country B can be suspicious about being blackmailed. Assume Country B knows about the contract (from the spy).
- Country B can decide if to accept or reject the spy’s offer.
- If Country B accepts, the spy will earn 2 rewards (from Country A and Country B)
- “The truth is never reported to County A”.
4 Solutions to the Moral Hazard and Defection Problem
- Encourage patriotism of the spy (benefit of truthfully reporting will be much larger than any ransom)
- Repeated game argument- if a spy cares about her future business, she will not sell the information to the adversary.
- Create a defection-proof contract, where Country B cannot buy back the information by ensuring that the reward much higher than the ransom Country B can afford to pay. If the ransom country B is willing to pay is higher than the expected benefits of Country A , then there is no defection-free contract.
- Increase competition among spies, where each spy is motivated to do better than the other ones and receive a higher reward.
What does game theory tells us about strategic policy? How can it inform a government choice? Work through an example.
Game theory suggests that governments would conduct economic espionage to reduce the R&D costs for their firms which are deciding on whether to enter a market. For example, Airbus and Boeing (European economic espionage helps Airbus enter).
What challenges AI presents to economic theory? Do we need to new models to assess the defence and security implications of the technology?
AI does not currently present a challenge to economic theory. It is a general-purpose technology which has massive effects on the economy. As well, over the past few years, it has been going through the network effect; when one business or nation uses it, others have to as well in order to remain competitive. As soon as enough organizations adapt to this technology, then everyone feels compelled to adopt it. Furthermore, AI will likely adhere to economies a scale, especially when it will be able to replicate itself. AI also goes with path dependency; AI will become locked in with other technologies, such as smartphones and then becomes quasi-irreversible. We most definitely do need new models to assess the defence and security implications of the technology because unlike nuclear weapons, AI cannot be controlled by only nation states. Anyone can use it, and it has the potential to develop its own agency.
