Why Can’t We Be Friends?
China and Japan have always been neighbors but, lately, they’ve not been friends. It has come to the world’s attention that the two giants of the East are going head to head to fight for ownership over a tiny group of islands, known to the Japanese as Senkaku and the Chinese as Diaoyu. China claimed that they have historical ownership of the islands, while Japan firmly announced that they were first to officially declare the islands as part of their southern territory. The islands, while small, have been suspected to be located near a natural gas field. The conflict between the two countries’ economic interests has elevated into a source of widespread call for nationalism. Both local enterprises and civilians are standing up to call for their government to take action to protect their national pride. In China, the government asks that citizens show a sense of patriotism but do not go over board. The questionable reactions from both governments leave observers around the world asking, “are they going to war?”
So, why can’t China and Japan just be friends? The answer is they can indeed be friends. There is such a thing as a win-win situation. However, blind-sighted by the heat of nationalism and economic prospects, the countries may resort to the unfortunate end as predicted by the game theory. The game theory of whether China and Japan should endorse their civilians’ cry for nationalism and declare war upon one another is a classic. A familiar, comparable example would be the game theory of mutually assured destruction. Let’s consider what both countries should do. The two strategies are either to keep peace, or to go to war. Because regrets and satisfactions are hard to account for, we will consider the payoffs from a purely economic standpoint. There are three possible scenarios: 1) China and Japan are in fact major business trade partners of one another, so retaining peace would benefit both of them economically. True, both of them might end up not getting the oil, but they would still gain the revenue from existing transactions. 2) Going to war, however, would rob both of them economically because they have to pay for the cost of war. None of them will gain profit from the oil near the islands. 3) Assume that if one side attacks while the other does not reciprocate, the attacker wins the ownership of the island. This means the attacker will receive profits from the oil, and the other country will be at loss because of destruction during the war. We set this loss at -10 because not mobilizing will probably make it easier for the other side to create more destruction.
If both sides use the dominant strategy shown in the game theory, they would both end up going to war and lose more than they can gain. This outcome is not only economically inefficient, but diplomatically devastating. Fortunately, the world is not black and white and this is not a game of prisoner’s dilemma. Unlike Clyde and Bonny, China and Japan can in fact talk to each other to achieve the best outcome. As a result, the international community is advocating for the most preferred strategy— bilateral talk and, ultimately, a “diplomatic settlement”.
-Barn
Sources:
http://articles.latimes.com/2012/sep/18/world/la-fg-china-japan-protests-20120919
http://www.bbc.co.uk/news/world-asia-pacific-11341139