Putin’s war: Rational, irrational or boundedly rational?

March 30, 2022 09:32
Russian President Vladimir Putin (Photo: Reuters)

The majority of political analysts and commentators, myself included, did not expect Putin would engage in an all-out invasion against Ukraine. The invasion seems too risky, in that the goal - the full subjugation of Ukraine - seems not so easy to achieve without paying a high cost.

The war has gone terribly wrong for Russia in every possible aspect so far. People suggested that the war trajectory has so far vindicated their view that the invasion is too risky, and thus Putin has not been rational. Some people went a step further by questioning Putin’s mental health. For example, James Clapper, the former US director of national intelligence, recently said he suspected Putin was “unhinged”.

I would think Putin was trying to be rational but ended up miscalculating. Everyone’s rationality is limited, including Putin’s. Psychology is useful to explain what is behind the miscalculations. For example, Professor Stephen Walt, a prominent international relations scholar, recently argued that Putin’s miscalculation was driven in part by the loss aversion bias - the psychological fear of losing Ukraine to the West for good. Notably, though, everyone has cognitive biases, but this does not mean you have mental issues. To make things worse, Russia suffers from a dictatorship with no fail-safe in place to prevent Putin’s personal biases from dictating the country’s policies.

In this article, I will discuss two more biases that Putin might have been exposed to in his miscalculations.

Behavioral Economics

Behavioral economics is a paradigm in the studies of economics with a strong application of psychology. In fact, the two key developers of the behavioral economics - the Nobel Prize laureates Daniel Kahneman and Amos Tversky - were themselves psychologists. Behavioral economics challenges the mainstream expected utility economics in the sense that, rather than assuming individuals are perfectly rational who are capable of making a decision with the highest expected utility, it depicts that, in reality, a human’s rationality is limited, which leads to suboptimal outcomes.

Rationality with limitations is called bounded rationality. Humans make decisions under imperfect information, limited brain capacity to process information, emotions, and cognitive biases. Behavioral economists identified various cognitive biases that naturally exist in a human brain. The most famous one is probably the loss aversion bias, an observation that individuals are more willing to take risks to avoid losses than to obtain gains.

My intention here is not to make a sweeping assessment on whether the decision to invade Ukraine is rational or irrational for Putin. His rationality is bounded, faulted with cognitive biases.

Deciding under the influence of arousal

Humans, when they are calm, are terrible at predicting their attitudes and actions when they are emotional. In 2011, Professor Dan Ariely, a behavioral economist and psychologist, conducted an experiment on a bunch of male college students by asking them to predict their attitudes towards unsafe, immoral and odd sexual activities. When the participants were in calm / unaroused mental status, unsurprisingly, most of them said no to the said activities. Then, the experiment team asked the participants to view a set of erotic pictures and then answer the same set of questions again. The results, you guessed it, revealed that the participants, when aroused, were on average twice higher in desire to engage in unsafe, immoral and odd sexual activities than when they were impassioned. The gist of this experiment is that people in a cold-headed condition could hardly accurately predict their actions, attitudes and preferences when they are passionate, aroused and emotional.

Putin in fact did his due diligence before the invasion. The Royal United Services Institute (‘RUSI’), a UK-based international defence and security think tank, recently published an article which stated that the Fifth Service of Russia’s Federal Security Service (‘FSB’) conducted social surveys in Ukraine in early February 2022. The polls found that Ukrainians were generally distrustful of the country’s political institutions and politicians, including the presidency. President Volodymyr Zelensky, despite being a superhero now, actually had an approval rate of 34% at that time. The surveys also found that 40% of the respondents said they would not defend Ukraine in a foreign invasion. Notably, this group of “non-resistant” respondents were concentrated in the east and south of Ukraine, which had been traditionally pro-Russia. Also, around half of this group of people said they would “adapt and survive” in the event of war, suggesting that they would be open to cooperate with the occupiers to live.

Putin was rational in the sense that he did study his enemies. RUSI suggested that Putin’s publicly speaking of the poor governance in Ukraine right before the invasion could be driven by the polling data to soften Ukrainian’s possible resistance.

But Putin does not understand his enemies. A war is a very sentimental state of affairs. Similar to those college students in Professor Ariely’s experiment, the Ukrainian respondents were asked during peacetime to predict their attitudes towards their country, politicians and the invaders in the event of war. The fact that my country is being invaded, that my hearing of the sounds of bombs, gunfire and air raid sirens, and that me looking at that widely shared picture of the 52-year-old Ukrainian school teacher with her face covered in blood due to Russian shelling would drastically change my emotions, alongside my attitudes and opinions.

History did not unfold according to the polling data. The FSB’s polling data was rendered completely useless the minute when the invasion began. The tenacious Ukrainian resistance surprised not only the Russian forces but the whole world. Residents in Kherson, a strategically important urban centre in south Ukraine have held daily protests against the Russian occupation. Zelensky’s approval rating rose to 90% following the invasion.

While Russian forces suffered huge losses and completed none of the major objectives, Putin put Colonel-General Sergei Beseda, the head of the Fifth Service of the FSB and his deputy under house arrest apparently for the “faulty intelligence” mentioned above. Although the arrests are likely an act of scapegoating, Putin would certainly have reasons to feel a sense of betrayal by his trusted spy heads.

I would believe Putin was not misled; Beseda was though. He was misled by the respondents who had failed to accurately foresee their emotional changes at war.

Optimism bias

Humans tend to overestimate the likelihood of a positive outcome and, equally, underestimate the likelihood of the occurrence of a negative event. We have ample examples for this observation. The Sydney Opera House took ten years longer than the schedule to complete, at a cost nearly 15 times higher than the original budget.

Putin’s expectation was high, if not downright unrealistic, that his troops would crush the 200,000-strong Ukrainian armed forces in a matter of days. Putin did have some reasons to believe this was achievable - he did that once in Crimea in 2014. But this optimism resulted in a complete lack of preparation for a possible prolonged war. Food, fuel and ammunition have been ill-supplied, leading to low morale amongst soldiers and expensive vehicles abandoned on roads running out of fuel.

On the diplomatic front, despite repeated stark warnings of crippling sanctions from the West before the invasion, the Russian foreign minister Sergey Lavrov recently publicly expressed that the Russian government was surprised at the scale of the sanctions.

Putin’s level of optimism somehow reminds me of a story between Stalin and Hitler before the German invasion in 1941. Both, of course, never trusted each other. Stalin was convinced that Hitler would invade one day, but he did not know when. To stay informed, he ordered the KGB, then the Soviet intelligence and security agency, to monitor the prices of wool because, yes, a sane mind would know the Russian winter is cold and you have to get prepared for it, including making enough clothes. By the summer of 1941, Stalin was convinced that Hitler would not invade this year because the international prices of wool did not rise, a sign that the Germans were not snapping up wool. Stalin was wrong, and the Germans invaded in that summer - Hitler actually did not expect the war would last beyond winter! The rest is history.

Hitler and Putin suffered from the same optimism bias, overestimating the likelihood of achieving a positive outcome and as a result being dangerously ill-prepared for the occurrence of negative outcomes. While we could compensate for the optimism bias in the case of the Sydney Opera House development with more time and money, optimism bias at war costs lives.

Bring in more views when deciding

Behavioral economics helps explain faults in Putin’s war plan. But cognitive biases are part of human nature and thus cannot be removed. After all, these biases are in fact to enhance our survivability rather than to help pick options with the highest socially defined utility. Being aware of these biases are of marginal help as well, in that you easily forget all you have learnt when having emotions.

It is not hopeless either. We just need more people to get involved in the decision making process. People with different preferences, ideologies and sources of information help bring in different viewpoints to a decision making process and in effect help mitigate the negative impacts of cognitive biases. The problem with Putin and other dictatorships such as Nazi Germany is that it is usually one person’s view overriding the others’, which effectively amplify the biases particularly affecting that one person.

So what is exactly to blame for the miscalculations? Maybe the dictatorship.

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Founder of Richard Ip Consultancy, a due diligence and sanctions compliance advisory business, the writer is a global political and compliance risk consultant with a special focus on Asia.