Analyzing Iran-US Negotiations Through a Game Theory Lens
The arrival of #Trump in the White House provided a glimpse into his domestic policies, revealing an anarcho-capitalist leaning that often collided with his populist rhetoric. But, on the international stage, Trump’s plans have always remained an enigma. The future of his relationship with Israel is questionable, his dealings with Turkey are complex, and his approach to Iran is a mystery.
The #Iran-US dynamic is not a simple bilateral interaction. It is deeply enmeshed in a complex multi-actor framework, where major regional and international actors such as Russia, Israel, Saudi Arabia, and Turkey and other, more indirect players, such as non-state entities and European nations, are vying for their own interests. This multi-layered situation needs to be analyzed not by a simplistic paradigm of a two-actor dynamic, but by a game theory model that shows the true complexity of the arena, and that allows us to see the potential moves and outcomes of each of the actors involved. We therefore need to move beyond the rhetoric, by using game theory and qualitative analysis to make sense of this high-stakes geopolitical game, understanding the strategies of all actors involved.
Key Players
US negotiations are not isolated, they are interconnected with the broader geopolitical landscape. This highly dynamic situation can be best described as a multi-actor framework where the actions and positions of numerous regional and global stakeholders shape the landscape. Each of these actors has its own priorities, levels of influence, and conflicting or overlapping interests that need to be understood. And this complicated situation can only be understood with a structured game theory framework.
The United States
As the most dominant actor, the U.S. seeks to curb Iran’s nuclear ambitions, limit its regional influence, and protect its alliances, particularly with Israel and Saudi Arabia. The U.S. also faces domestic pressures, such as reducing military expenditures in the Middle East while projecting global leadership.
Iran
For #Iran, survival is paramount. Tehran balances between resisting external pressure and sustaining its economic and political stability. Strategies may include leveraging regional proxies, using nuclear advancements as bargaining chips, or building stronger ties with Russia and China.
Israel
#Israel views Iran as an existential threat, particularly due to its nuclear. It actively pushes for harsher measures against #Iran, including military strikes if necessary, and exerts significant influence on U.S. #decision-making.
#Saudi_Arabia
#Riyadh prioritizes regional stability to focus on its Ideal Vision 2030 economic reforms. While opposing Iran expansionism, it avoids actions that might lead to large-scale regional conflicts that could destabilize oil markets.
#Turkey
Turkey aims to maintain its regional influence without directly engaging in a war. Ankara benefits from Iran remaining weak but stable, as instability could lead to refugee crises and disrupt trade.
#Russia and China
These #global_powers play a balancing role, supporting Iran to counter Western dominance while avoiding full-fledged alignment with Tehran that could jeopardize their global trade and diplomatic relations.
Payoff Matrix for Iran-U.S. #Negotiations
The payoff #matrix below illustrates potential outcomes for different strategies, assigning relative values to the preferences of Iran and the #U.S. The numbers reflect hypothetical utility scores based on their strategic priorities:
Analysis of the Payoff Matrix
Comprehensive Agreement: The U.S. benefits the most from a comprehensive agreement, which imposes significant constraints on Iran's regional and nuclear activities. However, this is seen as a major loss for Iran, as it undermines its strategic autonomy. In this payoff matrix, positive scores represent benefits or gains for each party, while negative scores indicate losses or costs. The range is from -10 (major loss) to +5 (major gain).
Limited Agreement: A limited agreement provides mutual benefits, easing economic sanctions on Iran while placing restrictions on its nuclear activities. The score for the U.S. (+3) reflects a moderate benefit, while Iran's score (+2) represents a smaller but still favorable outcome. However, this option is subject to significant regional pressures, including concerns from Israel and Saudi Arabia.
#Military_Action: As Tony Benn said before: "All war represents a failure of diplomacy!" Military action represents a worst-case scenario for both sides, resulting in heavy losses for each. For the U.S., the risk of destabilizing the region and escalating conflict makes it a poor option. For Iran, military action threatens its sovereignty and infrastructure, leading to a highly negative outcome.
Strategic Analysis Based on the Payoff Matrix
Nash Equilibrium Analysis:
In analyzing the Nash equilibrium of potential strategies between the United States and Iran, certain patterns emerge based on the payoffs for each side. If the U.S. pursues a limited agreement, the most advantageous response for Iran would be to accept the terms of the agreement, as it yields a positive outcome for both parties (+3 for Iran, +2 for the U.S.). Conversely, if Iran adopts a strategy of resistance, the U.S. may counter with a comprehensive agreement to circumvent the substantial costs and risks associated with direct confrontation, resulting in a payoff of -5 for Iran and +5 for the U.S. This outcome reflects the preference to de-escalate under high-stakes circumstances by reaching an agreement that will be more favorable than the status quo. However, if both sides decide to escalate tensions, the consequences would be significantly detrimental to both, with heightened economic, political, and security costs. In such a scenario, the mutual losses (-7 for Iran and -9 for the U.S.) underscore the destabilizing effects of prolonged hostility. This analysis highlights the critical importance of cooperative strategies to achieve a more balanced and less costly outcome for both nations.
Impact of Third Parties
a. Israel:
b. Saudi Arabia:
c. Turkey:
Possible Scenarios and Outcomes
Scenario 1: Limited Agreement
In this scenario, the U.S. strategy involves negotiating a limited deal with Iran to curb its nuclear program in exchange for some relief from sanctions. Iran, in turn, is willing to accept these limited nuclear constraints. The outcome of this agreement would be a temporary de-escalation of tensions, accompanied by partial economic recovery for Iran. However, third parties play significant roles in shaping the dynamics of this situation. Israel is likely to attempt sabotage against Iranian nuclear facilities, while Saudi Arabia supports efforts for regional stability. Meanwhile, Turkey seeks to enhance its trade ties with Iran, influencing the broader geopolitical landscape.
Scenario 2: Escalation
In this scenario, the U.S. strategy focuses on maintaining sanctions and increasing economic pressure on Iran. In response, Iran threatens to resume high-level uranium enrichment or take destabilizing actions in the region. This leads to heightened tensions without substantial changes in the overall status quo. Third parties also play key roles: Israel pushes for direct military action, while Saudi Arabia expresses concerns over the growing regional instability. Turkey, on the other hand, attempts to mediate between the conflicting parties in an effort to de-escalate the situation.
Scenario 3: Military Strike
In this scenario, the U.S. strategy involves launching strikes on Iranian nuclear sites, escalating the conflict. Iran responds with retaliation, potentially through proxy forces or direct attacks on U.S. regional interests. The outcome is widespread instability in the Middle East, with significant geopolitical repercussions. Third parties play crucial roles in this situation: Israel fully supports the U.S. actions, Saudi Arabia focuses on bolstering regional defense and mitigating the fallout of the conflict, while Turkey calls for de-escalation and works to secure its borders amid the heightened tensions.
All the evaluations mentioned from the perspective of game theory are based on the assumption that the players from both sides are rational individuals capable of setting aside their emotions and ideologies. However, it is clear that the dynamics of these negotiations will be influenced by the personal characteristics and specific strategies of each of these individuals. Trump, with his risk-taking personality, seeks short-term gains, while the new U.S. Secretary of State, Mark Rubio, holds contradictory positions—on one hand, supporting maximum pressure policies against Iran, and on the other, recently expressing readiness for negotiations. In contrast, the Iranian team acts based on strategic calculations combined with ideological considerations. As a result, political decisions are subject to unpredictable factors, and individual personalities and traits can play a significant role in the outcomes of negotiations.
Trump's latest remarks, including his claims about Iran’s role in terrorism and its weakened financial state, highlight his administration's continued focus on exerting maximum pressure on Tehran. His assertion that Iran is "bankrupt" and unable to support groups like Hezbollah or Hamas underscores his stance that Iran’s economic vulnerabilities can be leveraged to limit its regional influence. However, as tensions rise, the question remains: Will this aggressive strategy lead to a resolution, or will it escalate into a broader conflict, with global players like Israel, Saudi Arabia, and Turkey influencing the outcome? The next few months will likely shape the future of this high-stakes geopolitical game.