Game theory is great if you know what game you're playing. All this talk of Diplomacy reminds me of this memory of Adam Cadre:

I remember that in my ninth grade history class, the teacher had us play a game that was supposed to demonstrate how shifting alliances work. He divided the class into seven groups — dubbed Britain, France, Germany, Belgium, Italy, Austria and Russia — and, every few minutes, declared a "battle" between two of the countries. Then there was a negotiation period, during which we all were supposed to walk around the room making deals. Whichever warring country collected the most allies would win the battle and a certain number of points to divvy up with its allies. The idea, I think, was that countries in a battle would try to win over the wavering countries by promising them extra points to jump aboard.

That's not how it worked in practice. Three or four guys — the same ones who had gotten themselves elected to ASB, the student government — decided among themselves during the first negotiation period what the outcome would be, and told people whom to vote for. And the others just shrugged and did as they were told. The ASB guys had decided that Germany would win, followed by France, Britain, Belgium, Austria, Italy and Russia. The first battle was France vs. Russia. Germany and Britain both signed up on the French side. Austria and Italy, realizing that if they just went along with the ASB plan they'd come in 5th and 6th, joined up with Russia. That left it up to Belgium. I was on team Belgium. I voted to give our vote to the Russian side, because that way at least we weren't doomed to come in 4th. And no one else on my team went along. They meekly gave their points to the French side. (As I recall, Josh Lorton was particularly adamant about this. I guess he thought it would make the ASB guys like him.) After that, there was no contest. Britain vs. Austria? 6-1, Britain. Germany vs. Belgium? 6-1, Germany. (And we could have beaten them if we'd just formed a bloc with the other three losers!) The teacher noticed that Germany and France were always on the same side and declared Germany vs. France. Outcome: 6-1, Germany.

The ASB guys were able to just impose their will on a class of 40 students. No carrots, no sticks, just "here's what will happen" and everyone else nodding. I have no idea how that works. I do recall that because they were in student government, for fourth period they had to take a class called Leadership. From what I could tell they just spent the class playing volleyball out in the quad. But I guess they were learning something!

What happened? Why did Italy and Russia fall into line and abandon Austria in the second battle?

This utterly failed to demonstrate the "shifting alliances" that Adam thought the teacher wanted. Does this happen every year?

Yes, the students were coerced into "playing" this game, but elsewhere he describes the same thing happen in games that people choose to play. Moreover, he tells the first story to illustrate his perception of politics.