Game theory of Trade War. Two Players: China and the United States:
Two choices: Raise tariff by 25% or leave tariffs alone.
If both countries raise tariffs, each country’s GDP decreases by $200 billion.
If neither country raises tariffs, each country’s GDP remains the same.
If only one country raise its tariff, its GDP increases by $600 million and the other
country’s GDP decreases by $400 billion. Draw the payoff matrix and find the Nash
equilibrium