Page 23 - Australian Defence Magazine July 2019

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Most wargames, whether confirmatory
or exploratory, follow
a simple logic: put two self-interested actors with certain capabilities across from each other, see what they do, and then draw the relevant lessons.
ly as possible. We have made two self-inter- ested actors achieve the outcome we want by working backwards from the end goal to create the means that make it possible.
This is a simple example of an approach known as mechanism design. It has been hugely influential in the field of economics (winning a Nobel Prize) and has been used to ‘reverse-engineer’ policies ranging from Sin- gaporean housing regulations to auctions.
“Mechanism design is a branch of micro- economics that focuses on how to construct a game, a set of rules, that cause the agents strategically interacting in that game to play an equilibrium that is desirable to the mech- anism designer,” Professor of Economics at UNSW Richard Holden told ADM.
“It’s interesting in situations where the players have some private information that the mechanism designer doesn’t have.”
A wargame, on paper, is one such situa- tion. Two or more self-interested players are interacting using information that is not available to the designer – namely, their
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