The Taiwan Game. Navigating U.S.-China Tensions from Game Theory Perspective

Taiwan is a potential flashpoint for conflict between the U.S. and China. Although it has been de facto independent of China for more than seventy years, China’s leaders regard Taiwan as an inseparable part of the PRC. While China claims to strive for peaceful “reunification,” it has never renounced the use of force against Taiwan. Despite a 45-year policy of “strategic ambiguity” regarding Taiwan’s defense, the U.S. has declared its support for the use of military force to defend Taiwan. China’s threats and U.S. support have created a security dilemma, in which adversaries build up their respective offensive or defensive capabilities in response to each other’s actions. This article employs game theory to assess whether the United States and China are more likely to use force or seek accommodation in determining Taiwan’s future. The paper seeks to answer the following questions: What risks would China’s leaders be willing to take to secure the benefits of seizing Taiwan? What costs would they be willing to bear? Is the United States prepared to use military force to defend Taiwan? To demonstrate the usefulness of game theory, the paper begins with an explanation of the history of classical game theory. It then provides an overview of cross-strait relations and the role of the United States as Taiwan’s security guarantor. The payoff structure of this analysis reflects the dynamics of a Chicken Game with asymmetric stakes: China’s pursuit of peaceful unification represents a strategic imperative tied to national identity, while the United States prioritizes regional stability and ally credibility. These differing levels of urgency and risk tolerance shape their strategic decisions.