Abstract

This paper aims to examine the utilisation of game theory in the context of international trade. Due to variations in countries' production capacity, natural resource endowments, levels of technical innovation, and other factors, game theory can be employed as a tool for resource allocation. Theoretical game models posit that players in international trade are rational agents who consistently make sensible choices, which contradicts the actuality of the situation. Usually, participants in international trade consist of individuals that prioritise their own interests and may not always make judgements based on logic. This essay contends that while game theoretic models may not offer comprehensive solutions to all economic problems, their utilisation is crucial in addressing intricate matters related to negotiation, resource allocation, and strategic decision-making in the realm of international trade.

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