One of the most prominent applications of game theory and bargaining in international relations is the analysis of war and peace. War can be seen as a costly and risky game that involves competing over territory, resources, security, or prestige. Peace can be seen as a cooperative game that involves sharing benefits, avoiding costs, and resolving conflicts. Game theory and bargaining can help identify the factors that influence the decision to go to war or to seek peace, such as the expected payoffs, the probability of victory, the credibility of threats and commitments, the availability of outside options, and the role of third parties. For example, the game of chicken can illustrate the dilemma of nuclear deterrence, where two states face the choice of backing down or risking mutual annihilation. The game of prisoners' dilemma can illustrate the challenge of collective security, where states have an incentive to free-ride on the efforts of others to maintain peace.
Models like the Ultimatum Game or the Bargaining Game can be used to analyze diplomatic negotiations, where countries engage in strategic bargaining to reach mutually beneficial peace settlements. Game theory models, such as the Prisoner's Dilemma, can illustrate the strategic interactions between countries in negotiations over arms control agreements, where each country must decide whether to cooperate or defect regarding disarmament efforts.
In 1957, the US Navy created PERT to accelerate the Polaris submarine project. PERT - often used in conjunction with CPM - is a tool for managing activities against the minimum required completion time. CPM algorithmically reveals the longest chain of dependent activities with respect due to time taken from start to finish. PERT when used with CPM is strikingly analogous with the Extensive-Form (EF) Games model, noting that: - A PERT chart is a graph-like 'activity-on-node' diagram with time on the edges. - An EF Game is often visualized as a tree-like 'player-on-node' diagram with strategies on the edges, and payoffs on the leaves. - A hypothetical PERT-CPM-EF Game can consist of utility rankings of time with activities as strategies.
Another important application of game theory and bargaining in international relations is the study of trade and cooperation. Trade and cooperation can be seen as positive-sum games that generate mutual gains for the participants, but also involve distributional issues and potential conflicts of interest. Game theory and bargaining can help explain and evaluate the strategies and outcomes of trade and cooperation, such as the formation and functioning of trade agreements, international organizations, regimes, and norms. For example, the game of stag hunt can illustrate the problem of coordination, where states have to choose between a superior but risky cooperative outcome or an inferior but safe individual outcome. The game of assurance can illustrate the role of trust and reputation, where states have to overcome the uncertainty and fear of being exploited by others.
A third relevant application of game theory and bargaining in international relations is the exploration of diplomacy and negotiation. Diplomacy and negotiation can be seen as complex and dynamic games that involve communication, persuasion, compromise, and manipulation. Game theory and bargaining can help understand and improve the processes and outcomes of diplomacy and negotiation, such as the design and implementation of agreements, the management of disputes, the resolution of crises, and the promotion of dialogue. For example, the game of ultimatum can illustrate the power and limits of offers and demands, where one party proposes a division of a fixed sum and the other party can accept or reject it. The game of bargaining can illustrate the factors that affect the bargaining power and success of the parties, such as the reservation values, the time preferences, the information asymmetries, and the outside options.
In my experience, negotiation and game theory are like a team. When people negotiate, they try to make the best decisions. Game theory helps by giving tools to guess what others might do and to understand the best choices to make. It helps in situations with many people involved, when the same talks happen many times, or when not everyone knows everything. This combo helps people make smarter decisions when they talk and deal with others.
Game Theory can rely on classical new product development theory. A successful system for "NPD" is founded in the "Core Experience Statement". This is as much about how you want people to "feel", as it is about how they might go about attaining that feeling. Typically it describes how you want a classification of people to feel in a particular set of circumstances. Alien the Movie.. I want the movie audience to feel like they are watching "Jaws in Space". Now that we have a simple qualification to test subjective ideas against, we can rank them more objectively against other ideas to decide which we'd like to implement to achieve the core experience. Core Ex: The people of Israel and Gaza enjoying life together in mutual prosperity.
A fourth significant application of game theory and bargaining in international relations is the examination of alliances and coalitions. Alliances and coalitions can be seen as cooperative games that involve forming and maintaining groups of actors who share common interests or face common threats. Game theory and bargaining can help analyze and predict the behavior and performance of alliances and coalitions, such as the formation and dissolution of alliances and coalitions, the allocation of costs and benefits among members, the enforcement of rules and obligations, and the impact on stability and security. For example, the game of n-person prisoners' dilemma can illustrate the difficulty of sustaining cooperation among a large number of actors who have an incentive to defect or free-ride. The game of Shapley value can illustrate the method of calculating the fair distribution of payoffs among members based on their contribution to the coalition.
For instance, the n-person prisoner's dilemma exemplifies the challenges in maintaining cooperation in large groups, where individual actors might have incentives to defect for short-term gains. This model helps in understanding why certain alliances falter or why some nations choose to act unilaterally, despite shared goals. On the other hand, the Shapley value game offers insights into equitable payoff distribution within coalitions, based on each member's contribution. This is crucial in negotiations where resource allocation, financial contributions, or even strategic positioning are discussed.
A fifth interesting application of game theory and bargaining in international relations is the investigation of leadership and influence. Leadership and influence can be seen as strategic games that involve exercising authority, power, or persuasion over other actors. Game theory and bargaining can help understand and measure the sources and effects of leadership and influence, such as the emergence and decline of leaders and followers, the use and abuse of power and resources, the strategies and tactics of persuasion and manipulation, and the outcomes and consequences of leadership and influence. For example, the game of voting can illustrate the mechanism and outcome of collective decision-making, where actors have preferences over alternatives and use voting rules to aggregate them. The game of agenda-setting can illustrate the role and impact of leaders who have the power to shape the alternatives or the order of voting.
Game Theory models, such as Multi-Party Bargaining or Coalition Formation, can be applied to manage relationships with diverse stakeholders. The Prisoner's Dilemma and Coordination Games can help in developing team dynamics and cooperation strategies. The Ultimatum Game, Nash Bargaining Model, or Sequential Bargaining can be used to understand negotiation dynamics in leadership scenarios.
Game theory can help analyze conflicts between nations and provide insights into the strategies and incentives that can lead to peaceful resolutions. Bargaining models, such as the Prisoner's Dilemma, can be applied to understand how countries can cooperate and avoid conflict. The concept of Mutually Assured Destruction (MAD) is a classic example of a bargaining strategy where both sides have a strong incentive to avoid initiating a nuclear conflict.