GAME THEORY: ANALYSING INDIA - PAKISTAN

RELATION
INDEX
1. Introduction ...............................................................................................3
2. Applying Game Theory to the Relations of the two countries .....................................7
3. Instances for Tit for Tat Ind-Pak Relations ...................... ....................................10
4. Table Depicting India Pakistan Relation ......................................................... ...14
5. Conclusion .....................................................................................................15
6. Bibliography .............................................................................................17
-2INTRODUCTION
Game theory is a way of modelling complex phenomena in simple, mathematical ways, showing
gains and losses in the form of "points." It is used most often in psychology, sociology, economics,
and international relations to model how people act with each other.
Game theory, also known as interactive decision theory, studies the behavior of decision makers in
situations of strategic interdependence. Its founders are John Von Neumann and Oskar
Morgenstern who published the book The Theory of Games and Economic Behavior in 1944. The
relevance of the theory for international relations (IR) goes undisputed; it is a truism to assert that
states interact by trying to predict other states reactions to their decisions. Game-theory
applications to IR take the form of models, that is, the simplification and stylization of states
interactions. The three levels of game theory are of help here. The levels are extensive, strategic,
and coalitional forms. In an extensive-form model, the analyst thinks in terms of states presented as
players, actions available to players, sequences of players actions, players information conditions
and preferences, and, finally, outcomes of interactions. In a game at the strategic level, there are
nothing but players, players strategies and preferences over outcomes. The coalitional form is the
most abstract level analysis: coalitions of players and the values of these coalitions. The majority of
IR game models are pitched at the first two levels, as the last level of analysis assumes that
cooperation between players is binding. Yet if a state cooperates, it must do so only because of selfinterest; not because of a higher authority above states enforcing cooperative agreements. At least,
there is no supreme authority over sovereign and co-existing states.
History and impact of game theory1
The earliest example of a formal game-theoretic analysis is the study of a duopoly by Antoine
Cournot in 1838. The mathematician Emile Borel suggested a formal theory of games in 1921,

which was furthered by the mathematician John von Neumann in 1928 in a theory of parlor
games. Game theory was established as a field in its own right after the 1944 publication of the
monumental volume Theory of Games and Economic Behavior by von Neumann and the economist
Oskar Morgenstern. This book provided much of the basic terminology and problem setup that is
still in use today.
In 1950, John Nash demonstrated that finite games have always have an equilibrium point, at which
all players choose actions which are best for them given their opponents choices. This central
1
Game Theory by Theodore L. Turocy (Texas A&M University) & Bernhard von Stengel (London
School of
Economics) CDAM Research Report Oct 1, 2008
-3concept of noncooperative game theory has been a focal point of analysis since then. In the 1950s
and 1960s, game theory was broadened theoretically and applied to problems of war and politics.
Since the 1970s, it has driven a revolution in economic theory. Additionally, it has found
applications in sociology and psychology, and established links with evolution and biology. Game
theory received special attention in 1994 with the awarding of the Nobel prize in economics to
Nash, John Harsanyi, and Reinhard Selten.
At the end of the 1990s, a high-profile application of game theory has been the design of auctions.
Prominent game theorists have been involved in the design of auctions for allocating rights to the
use of bands of the electromagnetic spectrum to the mobile telecommunications industry. Most of
these auctions were designed with the goal of allocating these resources more efficiently than
traditional governmental practices, and additionally raised billions of dollars in the United States
and Europe.
Concept:
In game theory, a particular model is referred to as a "game." The most famous game is that of the
prisoner's dilemma. However, there are as many games as there are possible situations to diagram.
In international relations, it is now most used by neoliberal institutionalists to model how states may
engage in trade or other forms of cooperation, and how to induce "side payments" to reduce the
inequity in the gains. Previously, it was mostly used by deterrence theorists to describe how to
threaten others to convincingly engage in deterrence.
The prisoner's dilemma is a classic problem in game theory. It has the paradoxical outcome that
members of a group will consciously steer towards a sub-optimal outcome in certain scenarios.
The game is usually phrased in terms of two suspects, both of whom have been arrested, and
offered a bargain. If both stay silent, they will both serve 6 months in prison for a minor crime. If

one of them confesses, this provides evidence of a major crime. The confessor is rewarded by being
let free, and the other suspect will then serve ten years in prison. If both confess, they will both
serve two years
.
-4B
don't
confess
confess
A:6months A:10years
B:6months B: free
A: free A: 2 years
B: 10 years B: 2 years
don't
confess
A
confess
It is obvious that the best outcome for the group would be if both prisoners cooperated and stayed
silent: six months for both prisoners. However, in the "default" setting of the prisoner's dilemma, we
assume that the prisoners are not given the chance to work out such a strategy and that they are
interested in their own wellbeing first.
Prisoner A will now analyze his options:
If Prisoner B chooses "don't confess", Prisoner A's best choice will be "confess": A gets
out of prison immediately.
If Prisoner B chooses "confess", Prisoner A's best choice will be "confess", too: 2 years
is better than 10 years.
(The case for Prisoner B is symmetric.)
Using this reasoning, both prisoners will choose "confess", even though it is not the best result.
The strategy "confess" is a strictly dominant strategy: the choice of Prisoner B does not change the
way Prisoner A will act, and vice versa.
Game theory is the formal study of conflict and cooperation. Game theoretic concepts apply
whenever the actions of several agents are interdependent. These agents may be individuals,
groups, firms, or any combination of these. The concepts of game theory provide a language to
formulate, structure, analyze, and understand strategic scenarios.
In game theory, the Nash equilibrium is a solution concept of a non-cooperative game involving

two or more players, in which each player is assumed to know the equilibrium strategies of the
other players, and no player has anything to gain by changing only their own strategy. If each player
-5has chosen a strategy and no player can benefit by changing strategies while the other players keep
theirs unchanged, then the current set of strategy choices and the corresponding payoffs constitutes
a Nash equilibrium. The reality of the Nash equilibrium of a game can be tested using experimental
economics method.
-6APPLYING THE GAME THEORY TO THE RELATIONS
OF THE TWO COUNTRIES
Now consider two parties that deal with each other repeatedly in the same game: a repeated
Prisoner's Dilemma game. A long-running buyer-seller relationship can be considered an example.
Diplomatic moves between two rival countries can be another example. In these repeated games,
each party has information about how the other player acted in previous games, and that can be used
to predict their behaviour this time around.
What would be the best strategy in a repeated Prisoner's Dilemma game? Theorists have run
computer simulations with millions of interactions, with all sorts of complicated algorithms as
strategy, and looked at the outcomes from them. But no outcome has been resolved.
Now consider what should be done if the two parties were India and Pakistan. There have been
innumerable interactions between the two, and there are instances in which the two have
cooperated, some in which they betrayed each other, and some in which one cooperated, the other
betrayed. Is there a simple strategy to ensure that they would have maximised the benefit to each
other?
Well, it turns out that the best, the very best, strategy in a repeated Prisoner's Dilemma game
is the simplest: Tit-for-tat. That is, you start off by cooperating; thereafter you simply follow
what the other player did in the last round. It turns out this is the most effective solution, and
it can possibly lead to a situation where the two are not condemned to a Nash equilibrium of
mutual distrust and betrayal; in fact, in an ideal world, it will lead to the two of them
cooperating, with mutual benefit.
In fact, India has not followed tit-for-tat. For years, every Pakistani betrayal (Kargil, 26/11, Sharm el-Sheikh etc.) has been followed by an Indian cooperation (resumption of talks, rail links, cricket
ties), either under pressure from the motivated or clueless self-proclaimed intelligentsia or because
the powers-that-be actually believed unilateral concessions would somehow result in better
relations. Thus the Indians cooperated, and the Pakistanis betrayed merrily, with negative outcomes
for the former. A simple application of game theory would have cured this behaviour.

Famous game theoretical models include Prisoners Dilemma can be applied to India-Pakistan
relations.
Consider the following pay off matrix modelling the behaviour of India and Pakistan. Both players
have two strategies to choose from, either negotiate or not negotiate.
-7If Pakistan chooses to negotiate, India has two choices - either negotiate or not negotiate. If it
chooses to negotiate, it will get a benefit of 2, but if it chooses not to negotiate it will get a benefit
of 3. Thus it will choose the strategy of not negotiating.
What if Pakistan chooses not to negotiate? Indias benefit will be 0 if it chooses to negotiate. Its
benefit will be 1 if it chooses not to negotiate. Clearly it will choose not to negotiate.
Thus, in this special game, India has a dominant strategy of not negotiating irrespective of the
strategy chosen by Pakistan.
Likewise the game is structured in such a way that Pakistan also has the dominant strategy of
not negotiating. Thus, both players have the dominant strategy of not negotiating. Therefore
they will eventually end up in a situation where both choose not to negotiate and get a payoff
of (1, 1). 2
Note that if both had chosen (negotiate, negotiate) they would have gained a better pay off of (2, 2).
Why did they not choose this strategy? Because, either player then had the temptation of moving on
to a situation of not negotiating where its pay off would be even higher (3) in the hope that the
opponent will continue to negotiate. In such a situation the one who negotiates gets a pay of only 0
while the one who did not negotiate got a pay off of 3.
2
India-Pakistan Game-Theoretic Interplay by Arvind Gupta and Sarita Azad published in Statistic
Analysis
Journal on 20 April 2011
-8Thus, both players will end up not negotiating and settle for lower pay offs of (1, 1) rather than risk
being caught in any other situation where their pay offs may be higher but the chances of cheating
by the other player could not be ruled out.
-9INSTANCES OF TIT FOR TAT IND-PAK RELATIONS
1.
Pakistan: On August 5, 1965, between 26,000 and 33,000 Pakistani soldiers cross the ceasefire line
dressed as Kashmiri locals, crossing into Indian-administered Kashmir.
India: Infantry, armour and air force units were involved in the conflict. It remained localised to the

Kashmir theatre, but as the war expands, Indian troops cross the international border at Lahore on
September 6. The largest engagement of the war takes place in the Sialkot sector, where between
400 and 600 tanks square off in an inconclusive battle.
2.
Pakistan: A Pakistani military crackdown on Dhaka begins in March 1971, but India becomes
involved in the conflict in December, after the Pakistani air force launches a pre-emptive strike on
airfields in India's northwest.
India: India then launches a coordinated land, air and sea assault on East Pakistan. The Pakistani
army surrenders at Dhaka, and its army of more than 90,000 become prisoners of war. Hostilities
lasted
13
days,
making
this
one
of
the
shortest
wars
in
modern
history.
East Pakistan becomes the independent country of Bangladesh on December 6, 1971.
3.
India: India detonates five nuclear devices at Pokhran.
Pakistan: Pakistan responds by detonating six nuclear devices of its own in the Chaghai Hills.
The tests result in international sanctions being placed on both countries. In the same year, both
countries carry out tests of long-range missiles.
4.
Pakistan: The cause of the Kargil war 1999 was the infiltration of Pakistani soldiers and Kashmiri
militants into positions on the Indian side of the LOC, which serves as the de facto border between
the two states. During the initial stages of the war, Pakistan blamed the fighting entirely on
independent Kashmiri insurgents, but documents left behind by casualties and later statements by
- 10 Pakistan's Prime Minister and Chief of Army Staff showed involvement of Pakistani paramilitary

forces, led by General Ashraf Rashid.

India: The Indian Army, later on supported by the Indian Air Force, recaptured a majority of the
positions on the Indian side of the LOC infiltrated by the Pakistani troops and militants. With
international diplomatic opposition, the Pakistani forces withdrew from the remaining Indian
positions along the LOC.
5.
Pakistan: Tensions along the Line of Control remain high, with 38 people killed in an attack on the
Kashmiri assembly in Srinagar.
India: Following that attack, Farooq Abdullah, the chief minister of Indian-administered Kashmir,
calls on the Indian government to launch a full-scale military operation against alleged training
camps in Pakistan.
6.
Pakistan: The attack on Indian Parliament on 13 Dec 2001 was carried out by a terrorist group
based in Pakistan. Both countries were in a situation of rising tension and fears of nuclear war
raised their head.
India: In 2002, India mobilized its army along the India-Pakistan border for ten months in response
to a terror attack on the Indian parliament.
7.
Pakistan: General Musharraf, the President of Pakistan, felt the heat and gave an open statement
that Pakistan would not allow its territory to be used for supporting terrorism.
India: The Indian government which was finding it difficult to sustain a large scale mobilization for
such a long time, began to relax its posture after the assurance was given. The international
community also did some deft diplomacy to avoid war.
8.
Pakistan: Vajpayee and Musharraf hold direct talks at the 12th SAARC summit,2004, in Islamabad
in January, and the two countries' foreign secretaries meet later in the year. This year marks the
beginning of the Composite Dialogue Process, in which bilateral meetings are held between
- 11 officials at various levels of government (including foreign ministers, foreign secretaries, military
officers, border security officials, anti-narcotics officials and nuclear experts).
India: In November, on the eve of a visit to Jammu and Kashmir, the new Indian prime minister,
Manmohan Singh, announces that India will be reducing its deployment of troops there.
9.
Pakistan: On November 26,2008, armed gunmen open fire on civilians at several sites in Mumbai,
India. The attacks on the Taj Mahal Palace & Tower, the Oberoi Trident Hotel, the Chhatrapati

Shivaji Terminus, Leopold Cafe, Cama Hospital, Nariman House Jewish community centre, Metro
Cinema, St Xavier's College and in a lane near the Times of India office, prompt an almost threeday siege of the Taj, where gunmen remain holed up until all but one of them are killed in an Indian
security forces operation. More than 160 people are killed in the attacks. Terrorist were organized
by the Pakistan's territory.
India: In the wake of the attacks, India breaks off talks with Pakistan. On 7 December, US Senator
John McCain relayed a message from Prime Minister Manmohan Singh, to a group of Pakistanis at
a lunch in Lahore, that if Pakistan did not arrest those involved with the attacks, India would begin
aerial attacks against Pakistan.3
10.
Pakistan: On 8 January, 2013, Indian authorities said that Pakistani forces crossed the LoC, killing
two Indian soldiers. The incident sparked outrage in India and harsh reactions by the Indian army
and government over the news that the body of one of the soldiers had been beheaded.4
India: The reaction in India was overwhelmingly one of anger. Then Indian Prime Minister
Manmohan Singh said that this incident had seriously damaged the ongoing peace process and
"after this dastardly act, there cant be business as usual with Pakistan." Bikram Singh, the Chief of
Army Staff of India said that "We reserve the right to retaliate at a time of our choosing." Bikram
Singh also said,"The attack on January 8 was premeditated, a pre-planned activity. Such an
operation requires planning, detailed reconnaissance." On 15 January, a third skirmish reportedly
led to the death of another Pakistani soldier.
3
4
The Hindu (Chennai, India). 7 December 2008.
The Telgraph 08 Jan 2013
- 12 11.
India: The new Prime Minister Narendra Modi invited Pakistan Prime Minister to attend his
swearing ceremony. On May 27,2014, Indian Prime Minister Narendra Modi holds talks with
Pakistan's Prime Minister Nawaz Sharif in New Delhi. Both sides express willingness to begin new
era of bilateral relations.5
Pakistan: On May 25, Pakistan releases 151 Indian fishermen from its jails in a goodwill gesture
ahead of swearing-in ceremony of Narendra Modi as prime08 Jan 2013 minister.
12.
India: India moved further for bilateral ties and tried to ease the tension. In 7th BRICS summit in
Ufa, Russia, on 8-9 July 2015, PMs of both country arranged for NSA level talks. India reiterated

that Pakistan respect the spirit of the Simla & Ufa Agreements to which it was already committed. 6
Pakistan: Instead of addressing the issue of terrorism it focused on Kashmir issue and meeting the
Hurriyat Leaders. Thus the talks could not be held.7
5
6
7
The Indian Express May 22, 2014
The Hindu 11 July 2015
The Indian Express 23 Aug 2015
- 13 TABLE DEPICTING THE RELATIONSHIP BETWEEN INDIA-PAKISTAN
Pakistan's Reaction
In
1965
Result
Pakistani
India's Reaction
soldier No result. Only India was able India retaliated. Crossed the
crossed the border and entered to defend Kashmir.
border to reach the Lahore.
Kashmir
Launches a pre-emptive strike No benefit to the individual Launches a coordinated land,
on airfields in India's northwest. sides. Bangladesh came into air and sea assault on East
[1971]
Pakistan. The Pakistani army
existence.
surrenders at Dhaka
Denoted six nuclear devices in Losen the tension created by Denoted five nuclear devices.
India's response.
both
sides
accumulating
nuclear weapon,
In 1999 crossed the LOC
No territorial gain. Only left Attacked back. Regained its

the
situation
as
it
was. territory.
Deepens tension.
13 Dec 2001 attack on Indian Only retaliation by India. Deployment of more military
Parliament.
Resulted in deepening mutual force along the border.
distrust.
In 2002, said not allow its Eased down the suspicion and Re-deployed the military.
territory as terrorist base.
distrust.
In 2008 Mumbai attack by Tension increased. Peace talks Called off peace talk.
Pakistan based terrorist.
snapped.
In 2013, soldiers entered Indian Scope
of
peace
talks Condemned the attack. Two
territory and beheaded Indian diminished. days
soldier. killing Pakistan's soldier.
On 25 May 2014 released New era for new relationship Invites
later
Pakistan
Indian fishermen as PM Modi ushers. Peace talk between swearing-in
invited
Nawaz
Sharif
for the PM's of two countries.
Indian
of
retaliated
PM for
India's new

Prime Minister.
swearing ceremony.
Refutes
the
peace
talk
promised in Ufa summit.
as Tension appears again. All Invites for NSA level talks for
peace talks abandoned.
both the countries.
- 14 CONCLUSION
With the elections of Modi and Sharif, it seemed that Indo-Pakistan relations might turn a corner.
Sharif, who expressed his earnest hope in a brighter future between India and Pakistan made
normalizing relations with India a central plank of his platform, and attended Modis
inauguration. When India cancelled talks between the foreign secretaries in retaliation for Pakistani
meetings with Kashmiri separatist organizations Sharif sent a box of the choicest Pakistani
mangoes to Modi in a bid to patch things up.
Unfortunately, mango diplomacy could not block the Pakistani defense establishment, which had
been empowered after protests forced Sharif to beg for the armys help, which he got in return for
handing it control over the countrys defense and foreign policy portfolios.8
Now Pakistan has gone back to its old standby: killing Indian soldiers in Jammu and Kashmir. If the
pattern holds, India will now retaliate with something that hurts them in return. Thus we have titfor-tat, and a betrayal-betrayal, point-counterpoint. Not optimal, but a lot better than giving
unilateral concessions and being betrayed continuously. And this may be all that can be expected
with an irrational player like Pakistan.
India and Pakistan have fought several wars and have lived through the era of cooperation (though
limited) and cold peace (since Mumbai attacks). They have been unable to make a transition to the
era of cooperation and durable peace.
Game-theoretic exercises, applied to India-Pakistan situations, can supplement and even strengthen
traditional analysis. Game theory can be particularly helpful in understanding how the two countries
can get out of the low paying unhelpful situations. It can also throw light on crisis escalation and
crisis stability. It is also possible to apply game theory to understand the nuclear thresholds of the
two countries.
The future of Pakistan-India relations is far from certain. There are both major problems and

opportunities that could tilt the relationship either way. The protracted issues of Kashmir and
terrorism will remain a thorn in the side of both states and will continue to hamper the
8
India-Pakistan Relations: A Destructive Equilibrium Is there a way to avert the constant derailing of
bilateral
relations? by Jordan Olmstead November 02, 2014 published in The Diplomat
- 15 normalisation of relations into the future. That said, there are also opportunities which both states
can capitalise on in order to improve their economic and security ties and possibly normalise the
relationship moving forward. Economic ties continue to gain momentum with piecemeal initiatives
and reforms, and there is much hope on both sides that trade will continue to grow. Pakistan and
India have managed to cooperate on non-securitized, non-zero sum issues like disaster response
and energy, and the countries have made good faith efforts to deepen trade ties. India pledged relief
to Pakistan after the latters devastating 2010 earthquake, and Pakistan reciprocated after recent
floods in Indian administered Kashmir. The two countries have also discussed a proposal to share
information about the level of rivers that run between the two countries to form an early warning
flood system.
Thus it can be observed that the exact position of Indo-Pak relation is tit-for-tat. The corporation is
met by corporation and enmity by enmity. There is no simultaneous agreement to act. There is
distrust which is hindering to take a step forward. Analysing the relationship from the perspective of
the Game Theory it can be seen that present situation is in equilibrium but not optimal. The optimal
condition can be achieved only if the both parties agree to negotiate. This negotiation can take place
if only there is mutual trust developed. The change in the government in both countries show a new
wave that parties are willing to create a relationship. Thus, there is a scope of better ties up. But the
some break ups in this drive up shows the path though not unachievable but difficult.
- 16 BIBLIOGRAPHY
1. Indian Express
2. The Times of India
3. The Hindu
4. Game Theory by Theodore L. Turocy (Texas A&M University) & Bernhard von Stengel
(London School of Economics) CDAM Research Report Oct 1, 2008
5.
India-Pakistan Game-Theoretic Interplay by Arvind Gupta and Sarita Azad published in
Statistic Analysis Journal on 20 April 2011

6.
India-Pakistan Relations: A Destructive Equilibrium Is there a way to avert the constant
derailing of bilateral relations? by Jordan Olmstead November 02, 2014 published in The
Diplomat
- 17 -