Page 6 - Azerbaijan State University of Economics

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

Maximization is one of the most important assumptions in neoclassical economics
and this maximization is based on the rational decisions that economic firms
(influenced by the behavior of other factors) make. One of the most important tools
in this situation is game theory (Osborne, 2000). Some thinkers have compared the
theory of games to the discovery of double-stranded DNA and this important
discovery and theory is referred to as "a theory that can explain everything"
(Varoufakis, 2008).

Throughout history, major conflicts between powers have had catastrophic
consequences for human societies. Regardless of the petitions against these
catastrophes and wars, conflict is a pervasive category that may arise between two
companies to access the resources or market share, or between two parties, to gain
seats in parliament or similar cases. The question is whether, in conflict, as part of
history and actions of human societies, balance and optimality can be achieved? This
balance is important in so far as trying to destroy or suppress the opposite side for the
winning side is not the optimal solution. Accordingly, game theory using
mathematical models analyzed cooperation or competition between rational and
intelligent. The ultimate goal of this knowledge is to find the optimal solution for
players (Salimian & Shahbazi, 2017).

This paper is organized in seven sections. The section on economy and peace is
presented in the second section after the introduction. The third section refers to some
of the intellectual achievements of the twentieth century. The fourth section includes
literature review and the fifth section presents methodology in three subsections. The
game modeling is presented in section six and the conclusion and recommendations
in section seven.
ECONOMY AND PEACE
The researchers and scholars, especially in the liberal tradition, believe that political
conflicts are not an insolvable barrier to economic cooperation between conflicting
countries. Furthermore, they even claim that such cooperation reduces military
conflicts and disputes. This group presents the example of increasing cooperation
between China and Taiwan that is happening in the real world. In this case, none of
the concerns of pessimists could prevent two countries from cooperation and now
China is the greatest trade partner of Taiwan. The important point is that after the
financial crisis of 2001, trade cooperation between the two parties seriously increased
which is due to the penetration of the traders and businessmen of Taiwan in their
country which meant the Taiwanese officials had no choice but to modify their view
of economic cooperation with China.

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