News of an Israeli-Palestinian cease fire reminds me of Tyler's Cowen's excellent game theoretic exploration of their long struggle. This essay is worth a thousand news stories on the subject, but I still think that Tyler misses the simplest explanation of this sad situation: out-of-sync tit-for-tat.
1. Cooperate in round one.
2. In all other rounds, cooperate if the other side cooperated last turn, otherwise don't cooperate.
This strategy is usually called tit-for-tat: You scratch my back, I scratch yours; you don't scratch my back, I don't scratch yours. What could be simpler?
The main problem with tit-for-tat arises if people disagree about who stopped cooperating first - if they are "out of sync." When this happens, two tit-for-tat players get caught in a blood feud. I attack you because you attacked me last turn; but in your mind, you attacked me because I attacked you the turn before. Remember the Grangerford-Shepherdson feud from Huckleberry Finn?
Call it simplistic, but I think this is the heart of the Israeli-Palestinian conflict. The Palestinians think the Israelis started it with the creation of Israel. The Israelis think the Palestinians started it by fighting against the creation of Israel. The Palestinians see terrorism as retaliation for past wrongs. The Israelis see occupation as retaliation for terrorism. And so on. Both sides think that they have to punish the latest action of the other side in order to deter future offenses. And if they stop retaliating, it's a virtual admission of initial guilt.
And needless to say, both sides get hysterical if you suggest that maybe it isn't all that clear who started it.
How do you get out of this trap? I don't know, but realizing that you're in the trap is the first step toward getting out.