China versus USA: A Game-theoretic Simulation Approach

Abstract

This paper combines one of the central questions of contemporary political economy, id est the conflict between China and the USA, with one of the major methodological advances in modelling technique, id est game theory. Of course, such a task goes far beyond the possibilities of a single research paper, it thus remains a modest sketch of a possible approach. No formalisation attempt is independent of the content it tries to model. Therefore, the first part of the paper provides a very short synopsis of the envisaged global conflict between the two superpowers. Surprisingly, one of the historical contributors to this topic, John von Neumann, also is the scientist, which brought the methodological revolution of game theory to its full blossoming. The second part of the paper discusses von Neumann’s vision of game theory as a new formal language to describe human interaction - a somewhat different vision to the one that drove the mathematicians using his approach in the decades that followed. The third part of the paper presents a simple simulation exercise built on the ideas of the first two parts. The conclusion provides two lessons that can be learned from the paper, a methodological one and one concerning the mid-run development of the conflict between China and the USA.