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  • Why North Korea is a risk-taker

    May 23rd, 2013  by  Asia-Pacific Global Research Group - Jasper Kim

    The analysis below is an excerpt based on the original piece, North Korea’s Risk-taking Explained (by Jasper Kim, Wall Street Journal, Korea Realtime, May 22, 2013), which can be read in full HERE.
     

    Most commentators who track the country say it would never aim to initiate a war with South Korea and its allies because that would inevitably lead to the end of the Kim Jong Un regime. Self-preservation is something the Pyongyang leadership has been very successful at over the last six decades.
     

    So what explains the North’s apparent affinity for risk in routinely confronting the South, mostly verbally but occasionally with deadly force?
     

    Mathematical modeling helps explain the counter-intuitive marriage of risk-taking and rationality at the heart of decision making in North Korea.
     

    Consider you have one of the two choices:
    A: Receive $80 guaranteed; or
    B: Receive a 90% chance to receive $100
     

    Which option should a rational decision maker chose? Studies show that most people would decide to take option A, the sure thing. The thinking is that it is generally better to receive a guaranteed return even if it means receiving less.
     

    But the rational choice is actually option B. Getting to the answer requires what’s called a standard expected value calculation. The expected value of option A is $80 (100% x $80 = $80). The expected value of option B is $90 (90% x $100 = $90). So, because $90 (option B) is greater than $80 (option A), option B would be the rational choice even though it involves taking a risk. 

     
    In the above example, the expected higher gains in option B — equivalent to regime survival — have incentivized risk-taking by North Korea, especially if it doesn’t believe an option A exists.

     
    * The U.S., South Korea and Japan are defensively postured and risk-averse because the aspiration point is primarily maintaining their current position (in terms of preserving military and economic interests);
     
    * North Korea is offensively postured and risk-seeking because its aspiration point is gaining more than its current position (in terms of actively pursuing economic and non-economic assistance and diplomatic recognition).

     

    Given the current incentive structure from North Korea’s view, the Stalinist state sees only incentives to take further risks. As a result, the DPRK’s provocation cycle will only continue, unless the current incentive scheme is changed.
     

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