What game theory tells us about the China-Taiwan face-off

In terms of discussion, think of China’s policy makers as well as Taiwan as the game’s designers. The game may contain personal information, meaning that both sides are not sure of each other’s strategy, but have little in the form of knowledge about each other’s strategic choices. The policy makers or rulers of these countries can change the payoff and structure of the game to achieve a situation that is best for each of them. To this end, game theory helps to identify the possible best-case scenario in a China-Taiwan confrontation. However, there are many ‘best’ situations and theory does not tell us which one will occur.

The basic elements of this game are as follows. There are a small number of negotiating decision-makers, called ‘players’; In this sense, they are the heads of both the opponents. China and Taiwan have several possible actions they can take; Such actions are called ‘tactics’, and once both sides of the game have made their choices, an outcome is achieved in which both receive a ‘pay’, which is measured as the utility of their specific actions. can be considered in. Thus, the scenario in question can be characterized as a ‘two-player, two-strategy’ game.

If China and Taiwan go to war, both combatants will lose arms, troops and their peace, for starters, with the ill effects that accompany armed hostilities. However, in this case the net payout or profit may be far better for China, as Taiwan is a small country and has very strict limits on the deployment of weapons and troops. If Taiwan does not respond to Chinese provocation and succumbs to Beijing, it is advantageous to China, and could explain why Beijing is using its military might to intimidate Taipei by firing missiles and using other armed maneuvers. Why is it performing, in order to present it this way with possible approaches to achieve it.

If the two countries choose not to go to war, which may be the best solution for both, some sort of bilateral agreement may have to be signed, in which Taiwan will have to abide by the terms they mutually agree to. are not acceptable, leading to a sub-optimal solution.

An important aspect worth mentioning here is that tensions between these players have existed for a long time, right from the middle of the 20th century and can also be analyzed as an indirect game being played between China and the US. is (as a major proponent of Taiwan’s self-rule). China is adamant on integrating Taiwan’s regime with itself, for which its priority is logically peaceful reunification, which is also its initial policy, but without abandoning the use of force as an option to achieve that goal. The strategy that the US can adopt in this game is unpredictable and therefore a clear payoff cannot be easily worked out. Furthermore, China has so far adopted a soft policy towards Taiwan, in terms of actual damage, and thus the likely strategy of both sides is unpredictable.

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Another factor to consider is whether the game will have a ‘dominant strategy’ or a ‘Nash equilibrium’. An effective strategy is an action that is superior, no matter what other countries do, and a pair of opposing strategies is said to be in Nash equilibrium. If China’s choice is optimal, Taiwan’s choice is optimal, and Taiwan’s choice is China’s choice. is optimal for. However, as the analysis of the scenario shows, there is neither an effective strategy nor a Nash equilibrium in this case.

We have the possibility of sequential games, as countries move sequentially, not simultaneously, and in these cases, games are resolved by determining what countries will do in the final phase, then what they will do in the second-last phase , and so on.

When we examine each step, we take into account the tasks expected in subsequent steps. As US involvement in this game cannot be ruled out, the Sino-Taiwan standoff can widely be seen as a gradual game, with some openings to a solution that will lead to peace discussions along the way. can be worked through.

The exogenous factors that can be considered in this model would give us even more complex results for this game. The Chinese military has shown its ability to encircle Taiwan by sea, enforce blockades, and even launch massive invasions. A strategy to block all global supplies to Taiwan by cutting off the entry of sea freight would be seen as a Chinese aggression, even if there was no invasion.

Note that the United Nations does not recognize Taiwan as a separate national jurisdiction despite its de facto self-government, and neither do most countries in the world, which further complicates the story. However, if the ongoing tension escalates and if peace in the Indo-Pacific is at risk, all countries will have to unite to avert another war.

These are personal views of the author.

Surjit Karthikeyan is an Indian Economic Service officer working in the Ministry of Finance.

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