The repeated willingness of Greece and its creditors to bring the entire euro area to the brink of disaster presents a difficult and fascinating question for economic theorists: What game are they really playing?
On the surface, it seems like a classic game of chicken, in which each side tries to look determined enough to make the other crumble. The creditors, including the European Union, the International Monetary Fund and the European Central Bank, insist that they can't provide any more debt relief or loosen their austerity demands any further. Greece pushes for more, suggesting that it is willing to default on its debts, possibly triggering an unraveling of the monetary union, if it doesn't get its way.
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