Page 4 - Azerbaijan State University of Economics

THE JOURNAL OF ECONOMIC SCIENCES: THEORY AND PRACTICE, V.79, # 2, 2022, pp. 4-18

THE ROLE OF INVESTMENT IN THE EQUILIBRIUM OF
INTERNATIONAL POLITICAL ECONOMY (GAME THEORY
APPROACH)

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1
Salah Salimian , Mahdi Movahedi Beknazar , Kiumars Shahbazi , Zahra
3
Khalilzadeh Silabi

1 Department of Economics, Urmia University and Iranian National Tax Admission
Organization (LTU) Master Auditor, Iran (Corresponding Author)
Email: [email protected]

2 Member of the Scientific Shahed University, Faculty of Humanities & Head of
Education, Research and Planning, Iranian National Tax Administration, Tehran, Iran
Email: [email protected]

3 Department of Economics, Urmia University, Urmia, Iran
Email: [email protected]

4 Departmant of UFR de Droit Gestion (faculte DEG), Orleans University, France

Email: [email protected]

Received: October 10; accepted December 05, 2022; published online December 23, 2022

ABSTRACT:
The researchers in the international arena, especially in the ‘liberal tradition’,
emphasize on the effect of international economic cooperation such as trade and
investment in the expansion of peace and prevention of war. Based on this, the present
study has tried to utilize "Game theory" to give a different answer to this main question
of, “how economic cooperation in the form of international investment could prevent
peace or promote peace in addition to maximizing the profit of the investors”. In this
paper, using game theory and presenting a static game between players, the game
modeling between investors and countries has been done. The results indicated that
risks and output inside and outside the country is a direct function of external risk and
economic power, of course, this relationship is reversed for the investor. Finally, if
the hostility degree ( ) between countries is zero, then the countries will achieve a
maximum positive outcome which will increase with the decrease of economic power.

Key Words: Peace, Game theory, Static games of complete information, Economic
cooperation, Nash Equilibrium.

JEL Classification: D50, C71, C70, F52

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