| The relationship between Taiwan and mainland China over the past
decade has been characterized by an intricate mixture of compromise and
conflict. The common weakness of existing game theory analyses of cross-Strait
interaction lies in their presumption of an "either/or" dichotomy of strategy
choices, whereas policies are usually formulated on the basis of "both/and"
In the light of this seemingly obvious but oft-neglected aspect of bargaining behavior, the concept of "mixed strategy" is introduced here to investigate the dynamics of crisis bargaining between Taipei and Beijing. We contend that Taipei's concern over security and Beijing's emphasis on sovereignty together shape the dynamics of cross-Strait interaction. This security-sovereignty game, to a large extent, resembles the balance of terror between the two superpowers during the Cold War era. Contrary to the popular belief that Beijing's policy toward Taiwan derives mainly from the evaluation of its own payoff structure, the findings of a mixed strategy game model indicate that Beijing's strategy choice is largely contingent on its assessment of Taiwan's preferences, and vice versa. We derive four major propositions from the calculation of mixed strategy equilibrium in the game played between the two sides, and discuss the policy ramifications of each of them.
|Issues and Studies, Vol. 31, No. 3 (March 1995), pp. 64-91.|