In this recent article by the Globe and Mail, writer Andrew Steele analyzes the upcoming Fiscal Cliff through the game theoretic perspective. The game is "chicken". Two players face off, each faces a pay-off matrix such that whoever backs down leads to a negative outcome, and mutual refusal to back down leads to a mutually undesired outcome. The players are the Democratic and the Republican party, and their refusals are over the policies to take to avoid a fiscal cliff.
Fiscal cliff is the popular term describing the budget problems that faces the United States as the year 2012 comes to an end, and the Budget Control Act of 2011 goes into effect. A series of tax cuts from the Bush years will expire, as new taxes for the national healthcare law starts, all the at the same time as the drastic spending cuts proposed by the 2011 Debt Ceiling settlement.
The article basically paints in the Republican into a corner between a rock and a hard place - either raises taxes on a few, or trigger taxes on everyone, a direct conflict with their campaign promise to not raise taxes. At the same time, President Obama has something of a dominant strategy, in this iteration of the game. He can either raise taxes on a few and cut spending, as the Democrats want, or raises taxes on everyone and blame the Republicans for their intransigence.
What's at stake here, is the U.S. economy of the next few years and the potential to dive into yet another recession if both sides refuse to compromise. However, the game, and subsequent strategies assume both players are rational...far from certainty given how dangerously entrenched the sides were in resolving the ceiling.