Irrationality, Non-equilibrium Conflict and Complex Dynamics

Abstract

The bulk of research in conflict theory turns on the pivot of modern decision theory that is, in turn, concerned with an optimal decision making, which is predicated upon an ideal decision maker who is fully informed, able to compute with perfect accuracy, and hence fully rational. Conflict is difficult to comprehend in the context of optimal decision making that accords undue importance to the volition of exchange, the gains from trade and, hence, the win-win aspect of exchange. We offer for the first time, to the best of our knowledge, a model of non-equilibrium conflict in a simple framework of duopoly that examines decision-makers who refrain from maximising short-run returns/profits. We posit that these decision-makers are actuated by their long-run goal of survival and growth. Based on this simple notion we first establish that there does not exist any pure strategy Nash equilibrium conflict in our model. We are able to derive the dynamics that characterises the evolution of conflicts between two decision-makers. We establish that the dynamics involving predatory activities and conflicts can exhibit chaotic behaviour. Decision makers now fail to see systematic errors. Decision makers also fail to make long-run predictions with certainty even though they act in a deterministic world. Time profiles, which start very close together, will separate exponentially.