What Game Theory Can Tell Us About a Possible Armenian-Azerbaijani Conflict

The four-year-old International School of Economics at Tbilisi State University (ISET) in Tbilisi, Georgia was founded to unite students and faculty from all three South Caucasus countries for a Western-style education in economics. And, as if undergoing a rite of passage in its growth as an institution, it underwent its first major academic controversy this year.

Students were agitated, donors threatened to withdraw funding and an ambassador warned of unilateral sanctions.

What caused all the fuss? — A master’s thesis that used game theory to create a model for the probability of war between Armenia and Azerbaijan.

Ani Harutyunyan, 23, originally of Vanadzor, Armenia, set out last November to create a model that could determine the probability of all-out war breaking out between the two countries over the disputed territory of Nagorno-Karabakh based on a variety of factors.

Now, mind you, creating a game theory model is not the same as predicting whether war will happen or not – it’s not a magic eight ball.

Basically it works like this: say you are hungry and the two main factors governing your action are price of the food and deliciousness of the food. You have three options to choose from:

1.) Don’t eat. You save your money, but you don’t resolve the problem.

2.) Throw something together at home. You expend very little money, but, although your bachelor-pad-borne concoction is filling, it’s hardly gourmet.

3.) Go out to eat. You’ll have to pony up some dough, but you’ll get some good food out of it.

And so, if you make a formula out of those choices and input subjective number values for your culinary pickiness and current level of poverty, one can compute which action you are most likely to take.

Harutyunyan’s thesis created the formula for the major factors that would play into what Azerbaijan would demand as a settlement in the peace negotiations and what Armenia would be willing to accept, with renewed war being the probable result of a total deadlock; but she did not input her own subjective numbers to find a result. As Harutyunyan put it, “unlike journalists, scientists never make conclusions explicitly” (like I did earlier this month).

Nonetheless, her model and the thesis’ conclusions are quite interesting.

The basis of the model puts the Defender (Armenia) at the negotiating table with the Challenger (Azerbaijan). Because Armenia currently holds the territory that Azerbaijan wants, it is more or less satisfied with the status quo and is less likely to make a deal in which it sacrifices territory unless it is facing a war it thinks it will lose.

Azerbaijan wants the territory, but in assessing the war option it must decide if the costs of fighting the war are worth the benefits of potentially regaining control of Nagorno-Karabakh and other territories currently held by Armenia. The more Armenia believes Azerbaijan, which is more powerful militarily, is willing to go to war, the more amenable it will be towards cutting a deal.

The X-factor is the potential for third-party intervention as both Armenia and Azerbaijan have much larger allies in the region – Russia and Turkey respectively. The mood of each nation towards intervention on a scale of “reluctant” to “motivated” then factors into each side’s stance.

In the end, if Azerbaijan believes Russia will back Armenia strongly, then it will demand less, just like it will demand less if war appears to be too costly. If Turkey appears willing to strongly support Azerbaijan and Azerbaijan appears to be willing to take the costs of war, then Armenia is likely to accept a less favorable settlement. There are plenty of other combinations to this scheme.

However, the most important factor in the formula — as in most wars — is information. The study found that “there is no risk of war when disputants are perfectly informed about each other’s costs, the distribution of power, utilities for different outcomes.”

“However,” the paper continues, “states are rarely informed about each other completely.”

The paper also presupposes logical thinking on both sides, as well as the audience, which may have been a stretch.

As Harutyunyan presented her thesis this May to a mixed audience of Georgians, Armenians and Azeris in Tbilisi, she got heckles and interruptions – mostly from Azeri students objecting to a map used in the presentation which showed Nagorno-Karabakh and other Armenian-held territories shaded a different color from Azerbaijan. Some students shot video with their cell phones, although the university was filming the presentation as well.

When it came time for group discussion the room was silent. The shouting would start a few days later.

Karine Torosyan, a professor of economics at ISET, said that some students complained to school advisors and within days the university received a letter from the embassy of Azerbaijan in Georgia demanding Harutyunyan rewrite her thesis on a different topic or Azerbaijan would take steps to prevent Azeri students from attending ISET and would impede the school’s activities in the country.

Furthermore, the school, which is supported by British Petroleum, the World Bank and various other organizations and governments, began receiving calls from donors expressing concern over the thesis, intimating that future grants and donations hung in the balance.

Torosyan said the university held a series of meetings with concerned embassy officials, who said they believed in freedom of speech, but wanted the university to guard against “uncivilized discourse.”

ISET didn’t budge.

In the end, the university agreed to set up a faculty academic integrity committee to deal with future controversies but accepted the thesis and awarded Harutyunyan her master’s degree.

Torosyan said the university has not faced any consequences thus far from the Azerbaijani government or independent donors, but the fact that such a risk remained was “very embarrassing” for academia in the region.

In some ways, the reaction to Harutyunyan’s thesis tells nearly as much about the potential for resolution of the Nagorno-Karabakh conflict as the thesis itself. The issue is so sensitive that the roles could have easily been switched. Had the paper been written by an Azeri student and presented with a map that showed Karabakh and the other territories shaded the same color as Azerbaijan, it’s likely it would have received a similarly dismissive and off-put reaction from Armenians.

But Harutyunyan, for her part, said she reflects unfazed by the controversy that could have cost her her MA.

“Come on, it was funny for me all that,” she said. “What can I think? You wrote something, you are open for discussion, you want to reveal things, but then you are told to shut up.”