When Game Theory meets Geo Politics

TDT | Manama

Email: mail@newsofbahrain.com

During the recent escalations between the United States, Israel, and Iran, my perspective diverged from the dominant narrative. As a management student with exposure to negotiation frameworks, I observed the situation not merely as a geopolitical conflict but as a live demonstration of strategic theories unfolding in real time.

At the outset, what stood out was the classic Game of Chicken. Both sides appeared to accelerate toward confrontation, signalling strength and resolve.

Yet, at critical moments, there were subtle swerves— calibrated de-escalations designed to avoid catastrophic outcomes. Interestingly, these retreats were managed so that neither side appeared weak or willing to concede. It was not about avoiding conflict entirely, but about avoiding the perception of being the “chicken.”

As the situation evolved, another framework became visible—the Prisoner’s Dilemma. Instead of exercising restraint, particularly in communication, key players— most notably the United States and Iran—engaged in a war of words.

This mutual escalation, driven by distrust and the need to assert dominance, yielded little tangible gain. Instead, it risked reputational damage on both sides, illustrating how rational actors can arrive at suboptimal outcomes when cooperation is absent.

What we are witnessing now resembles a form of Nash equilibrium—where both sides, having pushed to the brink, settle into a position where neither can improve their outcome without worsening the other’s. In such a scenario, one could argue that both sides have simultaneously “won” and “lost.”

Yet, for the ordinary observer, the more pressing question remains: did anyone truly gain from this confrontation?

Modern wars are no longer about who fires first but who calculates better. The battlefield has shifted from land and sea to minds, markets and machines. The nature of conflict itself has evolved.

Modern “invasions” are no longer confined to territorial conquests. Today, influence can be exerted through technology, economic penetration, and strategic investments—often carried out silently, without overt aggression. Control is no longer always seized through force; it is frequently acquired through calculated, long-term positioning.

In this context, the timeless wisdom of Chanakya remains strikingly relevant. His principles emphasise that war must never be driven by emotion, but by careful calculation. A thorough assessment of strengths and weaknesses—what we today call a SWOT analysis—is essential before any confrontation.

Chanakya also cautioned against engaging in conflicts with uncertain outcomes, a principle that resonates strongly with the inherent risks of the Game of Chicken. His strategic framework of persuasion, incentives, punishment, and division highlights the importance of employing multiple approaches rather than relying solely on force.

Perhaps his most enduring insight lies in timing: knowing when to engage and when to withdraw. In the recent crisis, it could be argued that both sides, to an extent, recognised this balance and stepped back from the brink, avoiding further escalation.

Equally significant is the psychological dimension of conflict. Strength is not always displayed through overt action.

At times, appearing weak can be a strategic choice, just as projecting strength can compensate for underlying vulnerabilities. Such mind games continue to shape modern diplomacy and warfare.

Despite his deep understanding of strategy, Chanakya never glorified war. He recognised its cost—economic, social, and human. War, he warned, drains resources, disrupts peace, and brings suffering.

The escalations may settle, but the echoes of a new Cold War could linger. As the world moves toward a future of fewer borders and freer movement, one question remains: should borders continue to make life more difficult for future generations? It is a question modern-day Chanakyas must confront.

(P. Unnikrishnan is Chairman and Managing Director of The Daily Tribune)