Can game theory explain the Greek debt crisis?

During the summer of 2015, Greece was affected by a terrible economic situation. Greece was in the middle of a, (almost)  default and running on fumes. The Greek finance minister (Yanis Varoufakis) is an expert on game theory and this is what he applied when making decisions about Greece’s economic situation. He had to make a decision, either offer a three point plan, or let Greece fall into a default. This is not an easy choice for anyone to make, as there are a lot of possible outcomes and failures that could come with this decision. So, he weighed his choices and decided how to play the “game” that is planning his strategy.

The eurozone could either accept his plan or reject it, which would lead to a series of payoffs. Yanis wagered his bets on the fact that the eurozone would HAVE to accept the deal because game theory suggests that both players will use the strategy that provides the highest payoff, in this case, it was accepting the proposed deal. Ultimately, eurozone ended up accepting the plan and Yanis was correct in his predictions. Greece did not default and was able to pay back its debts. This shows that Game Theory can easily be applied to every realm of society and this is a very interesting interpretation of how Game Theory was applied when facing a financial crisis.

The whole article with diagrams that depict the choices of the minster can be found here: