China Japan Island Dispute
China and Japan are currently locked in a dispute over a small number of uninhabited islands in the East China Sea. Both nations wish to have control over the islands, and neither is willing to give way. However, this is beginning to have economic impacts. Both countries highly depend on each other to trade, and the political tension is slowing their economic relationship. Events with both nations are being cancelled, and Japan is noting noticeable delays on Chinese imports that is causing problems in factories dependent on resources from China.
| China\Japan | Fight for island | Forfeits islands |
| Fight for islands | -10, -10 | 10,0 |
| Forfeits Islands | 0,10 | -5, -5 |
This can be seen as an example of game theory. If both nations attempt to take the islands, than they are going to stay in their current scenario where they are fighting and nothing can get done. Also, it can be seen as difficult for both of them to share the islands, so that can also be seen as negative for both parties. However, if either country gives in and gives up the islands, they will be in a better scenario, because they will not be in a dispute, but the other country that receives the island will be in the best scenario. Either country receiving the islands will put both countries in a better situation that they are currently in.
Resolving their dispute where the islands go to either China or Japan are both Nash equilibria. Because of this, we can assume that China and Japan will be working to come to a settlement to their dispute as soon as possible. Even though one country will come out on top, it is in both of their favor to end the dispute as soon as possible.