The Trump administration<\/a> launched the war confident that the conflict would be relatively quick and cheap and that Iran wouldn\u2019t be able or willing to hit back. Neither assumption proved true, and as the fighting continued, the war started looking not like chess but a deadly game called \u201cthe dollar auction,\u201d which traps the players in unprofitable escalation.<\/p>\n The concept is straightforward: Two players bid for a prize of one dollar, with both agreeing to pay their last bid whatever happens. At first, the players bid eagerly in hopes of making a profit. As the price rises, the trap springs shut. The first player to bid $1 would come away even. But the other player would be out almost a dollar (his last bid) and so has an incentive to bet a little more\u2014say, $1.05\u2014in hopes of at least losing less (only five cents). Unfortunately, the same logic applies to the first player, who now has an incentive to raise as well. From here on in, the game has no internal stopping point; seemingly fruitless costs pile up as the players bet more and more until they walk away or bleed out.<\/p>\n Wars often become dollar auctions because the costs mount inexorably for both sides alike as the fighting continues. The belligerents pay incrementally along the way, often far more in total than what they initially thought the objective was worth. By late March, when it was clear neither side would give in easily, the Iran war reached the inflection point and slipped into the red for everybody.<\/p>\n The dollar auction has no set, predictable outcome. As the economist Martin Shubik notes, \u201cThe game\u2019s play appears to depend upon virtually only the social-psychology of the players, or other unstated factors of the environment in which it is played.\u201d In this case, the \u201cunstated factor\u201d was each side\u2019s ability to inflict extraordinary damage on the other: the United States through airpower and Iran through attacks on economic infrastructure around the Gulf. This created a situation of intra-war deterrence, with both sides reluctant to exercise their ultimate weapons for fear the other might do the same.<\/p>\n Trump\u2019s ultimatum\u2014threatening that \u201ca whole civilization will die\u201d if Iran did not capitulate\u2014was almost certainly a bluff, because carrying out such an extraordinary threat would have been incredibly costly for the United States and risky for its allies in the Gulf, which remained vulnerable to Iranian counterattack. But since everyone knows Trump\u2019s \u201cmadman\u201d act isn\u2019t entirely an act, the Iranians could not be sure Trump would cave. With neither side wanting to make the war total, both stepped back from the brink. And at that point, the war\u2019s endgame began in earnest.<\/p>\n PLAYING THE ENDGAME<\/p>\n By agreeing to the cease-fire, both the United States and Iran<\/a> acknowledged, at least tacitly, that they were not going to be able to get everything they wanted from the war. But the category of \u201ca draw\u201d covers a lot of ground between victory and defeat, and so how the endgame plays out is important. During the negotiations in Pakistan, the two sides will need to find compromise solutions to several problems including Iran\u2019s nuclear and missile programs, U.S. sanctions, arrangements for shipping through the Strait of Hormuz, Iran\u2019s regional subversion, and Israel\u2019s operations in Lebanon<\/a>. The gaps between the demands of each side are so great that some think the negotiations will break down and the cease-fire will fall apart. Yet both sides know that returning to war would put them into the same hellish position they just escaped\u2014paying ever-greater costs for diminishing returns with only worse options ahead.<\/p>\n Skillful diplomacy might conceivably use the talks to lay the foundations for a durable regional security structure. This is the kind of thing Henry Kissinger<\/a> excelled at. Yet with few Kissingers in evidence these days, it would be a mistake to raise expectations so high. Instead, the most plausible outcome is a mix of compromise and can-kicking, producing enough practical results to restart something resembling normal economic activity around the Gulf, even as the most contentious issues are left unresolved.<\/p>\n When the dust clears, Iran is likely to retain the potential for some sort of nuclear program, but the United States should be able to gain some restrictions on it. (Whether those restrictions will be more or less than the ones contained in the nuclear deal from which the United States withdrew in 2018 remains to be seen.) Some sanctions on Iran will be lifted; others may continue. The passage of ships through the Strait of Hormuz is likely to be restored, but on new terms that will probably advantage Iran.<\/p>\n A billboard featuring an image of the late Ayatollah Ali Khamenei, Tehran, Iran, April 2026 Majid Asgaripour \/ West Asia News Agency \/ Reuters <\/p>\n