When information is complete, when players are rational, and when binding agreements are precluded, perfect deterrence requires perfect credibility. This maxim, which we refer to as the credibility principle, is the rock upon which we construct a new theory of rational deterrence – Perfect Deterrence Theory. In this chapter and the next, we explore the implications of this strategic and political law for direct deterrence relationships in which at least one state must rely on its own strength and art to deter another. The present chapter examines those direct deterrence situations in which each of two states feels threatened. Chapter 5, by contrast, posits a unilateral (or asymmetric) deterrence game in which the players have analytically distinct roles: one player, content to preserve the status quo, harbors no significant aggressive desire while the other, unsatisfied with the existing distribution of benefits, is motivated to upset it. In part III, we turn away from direct deterrence relationships to explore situations of extended deterrence and the dynamics of the escalation process.