In the irrigated area of the Central Dry Zone of Myanmar, spatial interdependence as an indicative of strategic interaction among farmers in the choice of cropping system was observed by the analysis using the Binary Spatial Auto-Regressive (BSAR) model. Economic effects of strategic interaction among farmers in the irrigated rice-based system were analyzed by using theoretical specifications of a simultaneous Bayesian game. Rice monoculture area could persist in the upper irrigated area due to strategic interaction among the farmers, decreasing economic benefits of farmers in the area. Irrigation water availability in the lower irrigated area decreased due to high irrigation use by the rice monoculture system in the upper irrigated area. The economic efficiency of the irrigated rice-based system in the study area decreased by 14.74 percent due to the increase in rice monoculture area associated with the strategic interaction among farmers.
