The challenge presented by the financial situation as set out in my last post should focus the mind of any of us involved in public service.  Nevertheless, the temptation will always be to approach any problem – regardless of how potentially devastating that problem might be – from the point of view of self-interest (and not necessarily enlightened).  Yet the concern must be that without some dramatic change in mindset we face a situation where the entire system defaults.

I’ve always been attracted to the notion of Game Theory and thought it might be useful to try to construct my own “game” to enable us to explore our own unfortunate reality! 

Answers on a postcard.

Lake Punto Morto

Two countries are in conflict over a lake which extends equally on either side of their respective borders.  The lake is the only source of water for each of the countries.  Each of the countries seeks to extract as much water as possible from the reservoir each year so as to prevent the other country from gaining an advantage.

This has never really been a problem as the winter rains have always refilled the lake.  However, over the last two years there have been no winter rains and the lake is dangerously low.  There are no other means of storing significant quantities of water in either of the countries.  The countries do not speak the same language and will not meet under any circumstances

The countries have two options:

1.   Extract as much water as they can, as quickly as they can in the hope that the other country will be destroyed. 

2.   Reduce their own rate of extraction from the lake in the hope that the winter rains will replenish the lake’s water level.

Which option should the countries take?