Making the right decisions? - A Game Theoretical Analyse of the decision-making in the WTO Dispute Settlement

This theory testing study investigates the decision-making of the member states in the Dispute Settlement Body of the WTO, using a game theoretical approach. Game theory has its origins in political philosophy and can thus be valuable when analysing the behaviour of states in international regimes. Through using the specific game theory model Stag Hunt, this study aims to examine if such a model can be used to explain the behaviour of states in dispute settlement situations, if there is a difference in strategies between the member states depending on their economic status and if there is a difference in strategies between member states before and after the Great Recession of 2008-2009. To answer this, a quantitative analysis of the disputes is first made, to which a game theoretic model later is applied. When analysing the implications of the model on the dispute settlement, it is concluded that using the Stag Hunt game, many segments of the strategies of the member states can be explained using the model. However, there is a need for further development of the model to give a more complete and fair image of the states’ strategies in dispute settlement situations. The result from the study also shows that there is a difference in behaviour depending on the economic status of the countries. However, there is no shown change in behaviour by the states after the financial crisis.