GAME THEORY ANALYSIS

THE 2026
U.S.-ISRAEL-
IRAN WAR

DAY 31 OF HOSTILITIES | 30 MARCH 2026

This conflict is not random. It follows predictable patterns driven by strategic incentives, information asymmetries, and ideological commitments. This analysis models the war as a multi-player game to identify the structural forces driving escalation and the conditions under which resolution becomes possible.

PART I

The Players

Three nations with distinct objectives, constraints, and decision-making structures. Understanding their payoff functions is essential to predicting their behavior.

UNITED STATES

Trump administration / Centralized decision-making

ISRAEL

Netanyahu coalition / Multi-front strain

IRAN

Post-decapitation leadership / Regime survival priority

UNITED STATES

Primary Objectives

Reopen Strait of Hormuz
Eliminate Iranian nuclear capability
Demonstrate decisive military victory
Manage oil prices before midterms

View Constraints

Critical Constraints

~46% ATACMS/PrSM inventory expended
~40% THAAD interceptors depleted
War cost exceeding $200 billion
Gasoline at ~$4/gallon
No congressional authorization
13 troops killed, 15+ wounded

ISRAEL

Primary Objectives

Eliminate Iranian nuclear threat (existential)
Destroy Hezbollah infrastructure
Establish expanded security zone in Lebanon
Degrade Iran's conventional military

View Constraints

Critical Constraints

IDF under "severe strain" (Chief of Staff)
Fighting on two active fronts
1,116 killed in Lebanon operations
1.2 million Lebanese displaced
20+ Israeli casualties from Iranian strikes
Interceptor supply dependent on US

IRAN

Primary Objectives

Regime survival (overriding priority)
Maintain Hormuz leverage
Preserve nuclear latency
Inflict costs on US/Israel
Maintain Axis of Resistance

View Constraints

Critical Constraints

2,000+ killed; 82,000 buildings damaged
~90% ballistic missile capability reduced
Navy eliminated (43 vessels)
~80% air defenses degraded
BUT: Oil exports at 2.1M bpd earning premium
Sole Hormuz exporter

31

Days of Conflict

$200B+

Projected US War Cost

2,000+

Iranian Deaths

$112

Brent Crude (per barrel)

PART II

Five Interconnected Domains

This is not a single game but five simultaneous games. Outcomes in one domain shift payoffs in others, creating complex strategic coupling.

Strait of Hormuz: 20 million barrels per day / World's most critical chokepoint

Hormuz

Asymmetric Dominance Game

Players: US vs. Iran (China endogenous)

Critical variable: Iran's oil revenue under closure

Nuclear

Screening Game with Threshold

Players: Israel vs. Iran

Critical variable: Israel's breakout probability estimate (r)

Lebanon/Proxy

Multi-Front Attrition Game

Players: Israel vs. Hezbollah/Iran

Critical variable: IDF manpower, interceptor strain

Domestic Politics

Audience Cost Game

Players: All leaders vs. domestic audiences

Critical variable: Credibility of threats/commitments

Global Economy

Externality Game

Players: All belligerents vs. world

Critical variable: Oil price, recession risk

PART III

The Core Problem:
Iran's Dominant Strategy

Critical Finding

Iran has a strictly dominant strategy to hold the Strait of Hormuz closed. This is the structural engine driving the conflict.

The Hormuz Game

Iran earns approximately $235-265 million per day from oil exports at premium prices. It is the sole major exporter still transiting Hormuz. Holding the strait is not just strategic leverage-it's extremely profitable.

$235-265M per day: Iran's revenue from oil exports at premium prices

	US: Force Open (F)	US: Accept Closure (A)
Iran: Hold Closed (H)	US: 2 Iran: 3	US: 1 Iran: 4
Iran: Reopen (R)	US: 4 Iran: 1	US: 3 Iran: 2

Nash Equilibrium: (Force, Hold) - highlighted above

Iran prefers "Hold" regardless of US action (ranks 3 and 4 vs. 1 and 2). This is a strictly dominant strategy, robust to any transformation of payoffs.

The only way to break this equilibrium is to eliminate Iran's revenue source (Kharg Island strike) or its customer base (China ceasing purchases).

The China Lever

Chinese purchase cessation would shift ~30 percentage points toward settlement-the single most powerful intervention available. Currently foreclosed by simultaneous US-China trade confrontation.

KHARG ISLAND

84% of Iranian oil exports / Critical strategic target

CHINA: THE PIVOT

Sole major purchaser / 30-point settlement shift if ceased

PART IV

The Ideology Factor

Ideology operates through three distinct mechanisms that compound the conflict by increasing war tolerance, distorting threat perception, and raising the cost of compromise.

Ideological commitment: 12-15 percentage points shift from settlement to continued conflict

1. Endurance Premium

c_effective = c_material × (1 - δ)

Ideology reduces the perceived cost of war by imbuing conflict with spiritual meaning. Leaders with higher ideological commitment tolerate more pain.

δ_US = 0.15 (moderate)
δ_Israel = 0.22 (substantial)
δ_Iran = 0.21 (substantial)

2. Evidence Inflation

r_perceived = r_actual × β

Ideology distorts how leaders process ambiguous evidence. Eschatological frameworks make worst-case scenarios seem more likely than they are.

β_US = 1.24 (moderate)
β_Israel = 1.37 (high)
β_Iran = 1.34 (high)

3. Audience Cost Amplification

AC = AC_base × (1 + γ)

Ideology raises the domestic political cost of compromise by framing concessions as betrayal of sacred values rather than strategic adjustment.

γ_US = 0.35 (moderate)
γ_Israel = 0.51 (substantial)
γ_Iran = 0.48 (substantial)

Quantified Impact

Ideology shifts approximately 12-15 percentage points of probability mass from settlement scenarios toward continued conflict. This is moderate but meaningful-religious framing makes wars measurably harder to end.

PART V

Four Timelines Converging

The April-May 2026 window is the period of maximum danger. Four independent timelines are converging, compressing decision time and degrading information quality.

April-May 2026: Maximum danger window as four critical timelines converge

Hard Physical Constraint

1. Interceptor Depletion

THAAD at ~60% remaining. Depletion rate: ~2.5%/day during active engagement. Full depletion in ~5-6 weeks of combat. Physics does not extend deadlines.

CRITICAL

Information-Driven

2. Nuclear Threshold Crossing

Israel's perceived breakout probability (r_perceived) may already be at threshold (0.38-0.52 vs. r* ≈ 0.38). Rising ~0.02-0.03/week. Evidence inflation (β = 1.37) accelerates timeline. Window: now through mid-May.

CRITICAL

Political Deadline

3. Trump's Ultimatum Cycle

Current deadline: April 6 (third extension). Each extension reduces credibility by ~0.12-0.18. Threat probability approaching switching point. November midterms create outer bound on patience.

HIGH

Strategic Depreciation

4. Proxy Network Attrition

Probability of all fronts active simultaneously: 49% at 30 days → 19% at 90 days. Iran's multi-front leverage is a wasting asset, creating use-it-or-lose-it pressure.

HIGH

Convergence Point: April-May 2026

When all four timelines intersect, the probability of catastrophic miscalculation reaches maximum.

INTERCEPTOR DEPLETION

~40% THAAD depleted / 5-6 weeks remaining

NUCLEAR THRESHOLD

r_perceived: 0.38-0.52 / Threshold: 0.38

APRIL 6 DEADLINE

Third extension / Credibility eroding

PART VI

Scenarios:
3-6 Month Horizon

Equilibrium-derived scenarios with probability assessments. Click each to expand details.

Eight possible futures: Probability-weighted scenarios from game-theoretic equilibrium analysis

Grinding Multi-Front Attrition

33%

Status quo trajectory. April 6 deadline extended; mediation fails; proxy fronts partially sustain; oil revenue continues; no single decisive event. The Hormuz Nash Equilibrium (Force, Hold) persists.

Kharg Strike Transforms Game

18%

Kinetic escalation. US follows through on ultimatum (P(K) realized); Iran's payoff structure shifts dramatically as oil revenue collapses. Leads to either coerced settlement OR catastrophic counter-escalation.

Coerced Partial Settlement via Mediation

15%

Diplomatic breakthrough. Pakistan/Turkey mediation produces partial Hormuz reopening; nuclear issue deferred. Requires Iran to calculate partial deal exceeds continued closure value, possibly due to increased P(K) credibility.

Dual-Chokepoint Crisis

13%

Catastrophic escalation. Houthis attack Red Sea shipping (high probability given 85-95% participation rate); Saudi bypass fails; oil reaches $150-200/barrel. Largest supply disruption in human history, exceeding 1973 embargo by 3-4x.

US Domestic Political Reversal

7%

Internal constraint. Recession, casualties, or major military incident produces domestic crisis; congressional intervention; forced de-escalation. Requires "Black Hawk Down" moment or economic pain exceeding ideological endurance discount.

Nuclear Threshold Event

5%

Existential escalation. Israel's r_perceived crosses threshold; preemptive strike on nuclear facilities; cascading escalation across all domains. May already be near threshold due to evidence inflation (β = 1.37).

China Leverage Breakthrough

5%

Strategic reversal. US offers China concessions sufficient to shift purchasing behavior; Iran's revenue drops ~80%; Hormuz dominance collapses. Currently foreclosed by US-China trade confrontation; requires major policy reversal. Would shift ~30 points toward settlement.

Internal Iranian Fragmentation

4%

Regime crisis. Succession crisis + military losses + internal crackdown produce IRGC factional split or significant popular unrest. Low probability-regime historically resilient; recent MEK executions signal consolidation not fragmentation.

                    Sensitivity Analysis
                

If China ceased purchasing Iranian oil, settlement probability would jump from 15% to 45%-a 30-point shift. If ideology parameters were halved across all players, settlement would rise from 15% to 27%-a 12-point shift. The China lever is 2.5× more powerful than eliminating ideological factors.

PART VII

What Resolution Requires

Game theory specifies the structural changes needed to escape the current equilibrium. These are not policy recommendations but logical requirements derived from the payoff structure.

Six structural requirements for escaping the current equilibrium

Change Iran's Payoff from Hormuz Closure

Two paths: Kharg strike (kinetic, oil price spike) or Chinese purchase cessation (diplomatic). The latter is vastly superior on every dimension except feasibility under current administration.

Restore Information Symmetry on Nuclear File

IAEA access is the single most effective risk-reduction measure. It would halt the one-way ratchet on Israel's r_perceived, buying time. Any ceasefire without verification leaves the nuclear threshold on autopilot.

Reduce Audience Costs via Private Channels

Pakistan/Turkey track most promising. Private channels reduce audience cost multipliers by allowing leaders to negotiate without public commitment. Truth Social diplomacy does the opposite.

Create Package Exceeding Wartime Revenue Stream

Iran earns ~$250M/day. A 6-month war generates ~$45B in oil income. Any deal must offer net present value exceeding this plus ideological premium-implying package of $60-80B in economic value (sanctions relief, frozen assets, reconstruction).

Exploit Proxy Depreciation Window

Settlement negotiated now offers Iran better terms than in 90 days when proxies have attrited. Mediators should frame this temporal dynamic explicitly.

Address Ideology via Face-Saving Frameworks

Ideological commitments require reframing, not just material concessions. For Iran: "strategic patience." For Israel: "security through verification." For US: "strength through diplomacy." Audience cost multipliers mean framing determines viability.

Final Assessment

The conflict is structurally driven by Iran's dominant strategy in the Hormuz game. Breaking this requires either eliminating Iran's revenue source or its customer base.

Ideology compounds the problem by increasing war tolerance, distorting threat perception, and raising the cost of compromise-but it is not the primary driver.

The convergence of four timelines in April-May 2026 creates the period of maximum danger for catastrophic miscalculation. The window for rational settlement is narrow and closing.