This case study is a policy analysis based upon the modeling of policy options given the assumptions of classical game theory. These assumptions form the framework delineating the policy options available to each country. Our research describes the outcomes from the actions or decisions of the participants. Game theory was formulated to provide individuals with the probability of different outcomes from the actions or the decisions from the participants. When applying game theory to international relations it provides the decision-makers an opportunity to see what will occur when different forms of policy are put into effect.
Game theory is a series of events that each player calculates rationally before their next move.
For the purpose of this case study, game theory could be formally defined as a theory of rational decision in conflict situations. Furthermore, game theory assumes that each player is rational, in the sense that their preference ordering of outcomes is determined by the order of magnitudes of their associated payoffs. This ability to be rational in thought and actions is the essential element the decision-makers must obtain in order to be successful in these games. The contrast between these two cases illustrates the impact of decision-makers perceptions and preferences in policy choices. This information suggests that different policy option have very different affects on bilateral relations.