The Theory of Conflict Analysis

In the spirit of theoretical pluralism, this chapter critically illustrates an alternative game theoretic approach that extends the Nash equilibrium criterion. It is assumed that players believe in the empathic ability to anticipate other players’ simultaneous and future reactions to their strategic choice. An individual’s best response strategy is defined based on this projection, adding additional stability conditions to strategic choice and increasing the set of potential equilibria beyond pure Nash equilibria. Among other interesting properties the approach can thus explain the occurrence of stable outcomes that are not Nash equilibria, such as the cooperative equilibrium in the Prisoner’s Dilemma, without the necessity to change the game structure. Conflict Analysis further enlarges flexibility as the approach requires only an ordinal preference order. As a basis for future academic debates, the assumptions of the Conflict Analysis approach are critically analysed and applied to a set of games, demonstrating the approaches advantages and drawbacks