Bruce Bueno de Mesquita wrote an article in Intelligence Analysis: Behavioral and Social Scientific Foundations which examined how game theory can be applied to intelligence analysis.
Mesquita begins by defining game theory as "a body of reasoning, grounded in mathematics but readily understood intuitively as a reflection of how people may behave, particularly in situations that involve high stakes for them. It is part of a family of theories that assume people are rational, meaning that they do what they believe (perhaps mistakenly) is in their best interest." Mesquita discusses the basics of game theory, such as anticipating how others will act, constraints, considering counter-factual actions, and using cost-benefit analysis to help make decisions. Mesquita argues that game theory helps integrate knowledge based on different theories, such as structural, organizational, behavioral, and psychological.
In the realm of national security, Mesquita discusses five constraints that effect analysis. These are uncertainty, risks, distribution of costs and benefits, coordination, and patience. According to Mesquita, game theory examines uncertainty in two different ways: random shocks to a situation and not knowing a critical piece of information about a player. Random events can change the expectations of a player, leading to a change in action. Examples can be a key figure dying or an earthquake, both events of which can alter the focus of a decision maker. Not knowing about the player also increases uncertainty, as it is difficult to determine what game players are playing.
Risks deal with the probability of alternative results which arise from different choices of action. Part of what makes risks so important is how players respond to risk. Some are more prone to taking risks while others are less prone. Mesquita gives an example of risk while discussing the Shah of Iran. Nondemocratic leaders who stay in office past two years see a significant year-to-year decline in the risk of being forcibly removed from office, as long as all else is equal. This is why it was a surprise when the Shah was ousted after over 20 years after his coronation. What was not taken into account was the Shah's terminal illness, which tend to increase the risk of a nondemocratic being deposed.
Distribution of costs and benefits deals with the outcomes of games. This leads to players bluffing in order to gain their desired outcome. There are two types of bluffing: cheap and costly. A cheap bluff is a bluff that costs the player nothing, such as rhetoric or hinted threats in official communiques. A costly bluff, which is more likely to be noticed by the other player or players, could be the mobilization of military forces or missile tests. The more costly the bluff, the more likely the other players will believe it.
Coordination is a problem that arises when players work towards a common goal or resolution of an issue. There are two types of coordination issues: pure coordination problems and more complex coordination problems. A pure coordination problem is deciding which side of the road allied tanks should drive on. A more complex coordination problem is creating incentives to get allies to coordinate in a time of war. En example of this could be promising an ally territory from the enemy if they were to invade at a certain time.
Lastly, patience examines the value a given cost or benefit has today when compared with tomorrow (or longer). The more patient an decision maker is, the closer the future cost or benefit is to the current one. The more impatient the person, the greater the difference in current and future costs and benefits.
Mesquita concludes by discussing some of the limitations of game theory. Game theory makes very heavy assumptions about information and people. For a game to work, it requires that some critical information is common knowledge (Player A knows that Player B has nerve gas, and Player B knows that Player A knows). Same applies with people: Player A assumes that Player B will continue playing the game, or assumes that there will be no more players. Lastly, game theory models can lead to very (sometimes overly) precise outcomes. This can cause issues as it can be difficult to be adaptive with outcomes
Mesquita's article was very readable, which is an issue that I have come across when attempting to learn more about game theory. In particular, his caveat about rationality in game theory was right on the spot: what may be irrational to some is rational to others. He explained concepts very well and gave great examples of the different types of constraint. That being said, there were two issues that I can see some having with his discussion of game theory and intelligence.
First, at no point did Mesquita use mathematical formulas. While this was not an issue with me, as I would not have understood them anyways, it could be problematic to those that want to know how to do game theory mathematically. The purpose of the article was not to teach the reader how to crate game theory models, but to explain how it can be applied to intelligence. Even so, it could have been useful to those who are interested in creating a game theory model.
Second, while his discussion of game theory was interesting and the examples he used helped explain the concepts, most of it seemed to be more focused on international relations than intelligence. Granted, game theory is heavily used in international relations, so it would make sense for the majority of examples to be international relations-focused. The constraints he discussed definitely have applications in the intelligence field, but this application seemed to be a secondary objective.
Source: Mesquita, B (2011) Applications of Game Theory in Support of Intelligence Analysis. Intelligence Analysis: Behavioral and Social Scientific Foundations, 57-82. Retrieved from http://www.nap.edu/openbook.php?record_id=13062&page=57