Game, Set, Brexit!

Purpose-the aim of this paper is to identify the best scenario in the case of Brexit negotiations using the game theory.Design/Methodology/Approach-I used a payoffs matrix, including the strategies of EU for UK (World Trade Organization status (WTO), a trilateral agreement (EU-UK-US), Free Trade Agreement (FTA), Norway Model and Swiss Model), the strategies of UK for EU (freedom of movement, limited freedom of movement) and the payoffs are based on the GDP losses for UK and EU from the previous studies.Findings-the best scenario from the matrix is a trilateral agreement between UKEU-US; the only scenario in which the GDPs of all actors (UK, EU, US) are growing comparing with the situation when UK was an EU member, but this is only a long term solution. Second best is FTA and the worst case scenario is WTO. Norway Model and Swiss Model come in between FTA and WTO.Practical implications-from author’s knowledge, this is the first time when Brexit negotiations are being analyzed using the game theory.Originality/Value-the paper tries to find an answer for which is the best scenario for maximizing the benefits and minimizing the costs in Brexit situation for UK and EU too.Limitations-the limitation of the model is that it considers UK and EU as united entities. Another limitation is that the study puts the accent on the economic and the security reasons of UK and EU, ignoring other types of reasons. There is another possible scenario; UK to rejoin EU, but the possibility is low.