Geopolitical Conflict Through the Lens of Nash Equilibrium
Before beginning this blog, I should acknowledge that I do not have the ability to speak with complete confidence about the current confrontation between the U.S. and Iran. Those who are not direct participants in the conflict cannot fully understand the deeper motives, internal calculations, and hidden tensions between the parties. As an outside observer, therefore, I am not in a position to make definitive judgments. Much of the true structure of the conflict is neither visible nor easily knowable, and even a logically coherent model may fail when the underlying incentives, information, or constraints change unexpectedly. Most media reports portray the current confrontation between the U.S. and Iran as a struggle between good and evil, or as the product of the greed of a few actors. While this framing attracts attention, it is analytically weak. Consequently, individual investors influenced by such narratives may misinterpret the prospects for war and make costly financial decisi...