ABSTRACT
The researchers in the international arena, especially in the ‘liberal tradition’, emphasize on the effect of international economic cooperation such as trade and investment in the expansion of peace and prevention of war. Based on this, the present study has tried to utilize "Game theory" to give a different answer to this main question of, “how economic cooperation in the form of international investment could prevent peace or promote peace in addition to maximizing the profit of the investors”. In this paper, using game theory and presenting a static game between players, the game modeling between investors and countries has been done. The results indicated that risks and output inside and outside the country is a direct function of external risk and economic power, of course, this relationship is reversed for the investor. Finally, if the hostility degree (ρ) between countries is zero, then the countries will achieve a maximum positive outcome which will increase with the decrease of economic power.

Key Words: Peace, Game theory, Static games of complete information, Economic cooperation, Nash Equilibrium.

JEL Classification: D50, C71, C70, F52