Virtual Worlds as a New Game Theoretic Model for International Law: The Case of Bilateral Investment Treaties

Abstract

Game theoretic analysis of international law has traditionally revolved around the Prisoner’s Dilemma, a model developed during the Cold War that reflects the general unenforceability of international agreements. Bilateral Investment Treaties (BITs) are, however, enforceable and require a different approach. The current global economic crisis will exacerbate the controversies concerning the broad powers exercised by the arbitrators appointed under BITs. It is thus imperative to explore a viable new game theoretic model, which can be provided by virtual worlds such as Second Life and World of Warcraft.

Keywords: Virtual worlds, Prisoner's Dilemma, Game Theory, Bilateral Investment Treaties, End-User Licensing Agreement

JEL Classification: C70, F21