Game-Theoretic Analysis of the North Korean Missile Crisis

Abstract

This paper will provide a game-theoretic analysis of the ongoing North Korean missile crisis. It begins by discerning from the available literature the options available to each party involved in the game and determining a rank ordering (best to worst) for each party of the possible combinations of options. I will use the Theory of Moves (ToM) to predict the ultimate outcome of the crisis. This requires, in addition, the initial “state of play” when negotiations begin, and the first mover in the game, both given by the history of the crisis. ToM allows the parties strictly alternating turns to move from the initial state. At each turn to move, a player can either move (back to the previous state or ahead to another state), or pass (remain in the current state). Equilibrium is achieved when the players choose not to move on consecutive turns, i.e., accept the current state as the ultimate outcome. The preference orderings of each player are difficult to determine with certainty, so we consider a variety of possibilities. A reading of the existing literature on the history of the crisis and the expressed interests of the countries involved suggests a set of plausible possibilities worth considering in this analysis. I use ToM to sort this set of possibilities into three subsets that each yield a different ultimate outcome. Comparisons are drawn between the predictions of the ToM and the Nash Equilibrium (NE), a popular game-theoretic approach. Thus, the analysis narrows the likely outcomes of the crisis from nine to three and indicates how the preference orderings of the two countries influence which of these three outcomes actually occurs.