In Diplomacy, you can lie, cheat and steal. You can use bribery and intimidation. You can betray your best friend and observers will praise your cleverness.

It's all written down in the rules, and the one who misbehaves most outrageously is likely to be the big winner.

We're not talking about the small-d diplomacy that is one of Washington's major industries -- an activity in which nobody ever lies, cheats or intimidates. We're talking about big-D Diplomacy, a patented, trademarked game of power, persuasion and downright meanness.

Last weekend a small group of American and foreign experts on Diplomacy's devious devices got together in Fredericksburg, Va., to see which one could out-nasty all the others for the 1986 American championship.

*"We have four basic player types," according to Richard Warner, a professor of Russian history at Mary Washington College who was the host to this year's national convention of Diplomacy players (called "Dipcon" in players' jargon) and championship tournament.

"One, there are the yuppie-managerial types who want to run everything. Two, we have the inscrutables. Nobody can figure them out, and they usually have facial hair. Third are the hired guns -- young men, lean and mean. Their attitude is, 'If you don't cooperate with me, you're dead.' Finally, we have Mr. Nice Guy, who is usually older and has some body weight, which helps the nice-guy image. He stabs people in the back while being nice to them."

On first acquaintance, Warner seemed like a nice guy.

Each of the 10 to 15 simultaneous games was played in a separate room of Mary Washington College: seven men sitting around a table, warily eyeing one another and the board, an altered (and copyrighted) map of Europe before World War I. Each of the men represented one of that epoch's great powers -- England, Germany, France, Russia, Austria-Hungary, Italy or Turkey -- and jockeyed for position on the board with small wooden blocks representing armies and naval fleets.

T-shirted players would go off into a corner, a corridor or another room -- usually in pairs, sometimes as a threesome -- to negotiate in whispers. "Let's make a deal. You help me to capture Moscow, and I'll help you to capture Spain." Or "I'm not threatening you -- I'm going after Austria."

Prudent players would take such statements with a grain of salt. Lying to your allies is not only permitted in this game; sometimes it's necessary.

"You can't win a game without cooperating with at least one other player," an expert explained. "And you can't win a game without betraying at least one other player."

After a game, players like to talk nostalgically about "back stabbings" they have administered or received.

*Winner is Malcolm Smith, a British national who lives in Norway, works for ITT and played wearing a Union Jack T-shirt. Stand up and take a bow, Malcolm, you rat!

Henry Kissinger is a sort of cult figure among Diplomacy players. There is a persistent rumor in the Diplomacy underground that he had something to do with the game's invention.

Allan Calhamer, a Chicagoan who holds the patents, flatly denies this. "Kissinger had nothing to do with it," he says in a tone that indicates he has said the same thing many times. Calhamer invented the game while he was an undergraduate at Harvard in 1953. Kissinger was a grad student at the same time.

There are also rumors among players that Kissinger (like many other Nixon appointees) is an avid Diplomacy player, but nobody seems to know for sure. Kissinger has said nothing publicly on the subject. And would any good Diplomacy player believe him if he did speak out?

One well-known Diplomacy player is Walter Cronkite. This is the man Americans said they trusted more than any other?

bat16 Political diplomacy is as old as human relations. Big-D Diplomacy was invented when Calhamer was a 20-year-old student of diplomatic history.

"I sometimes think of it as my undergraduate thesis," he says 30-odd years later.

Like many a student since his time, Calhamer found that Diplomacy distracted him from his studies. He almost got his PhD in history, he says, but dropped out to develop and market the game, which he began to sell from his basement workshop around 1959.

Now sold in a big blue box by the Avalon Hill Game Co. of Baltimore, it has been played by millions of people. Last year Games magazine placed this pastime (along with chess, Monopoly, Scrabble and a few others) on its exclusive list of classic games.

It was a once-in-a-lifetime inspiration, and with a few years of help from friends who played the game intensively and critically, Calhamer got it perfect the first time. He has not had a marketable game idea since, but royalties for Diplomacy now supply about a quarter of his income.

After revolutionizing the concept of games, he sacrificed a possible diplomatic career to develop his idea and then fell into a low profile. Today he lives near Chicago and delivers mail for the U.S. Postal Service to support his wife and two daughters.

He is not particularly philosophical about what happened. The postal job was taken, 16 years ago, "purely on an emergency basis," Calhamer says. "I'd love to switch to something better, but nobody has brought it up . . . 'Invented a game' on your re'sume' doesn't mean much to a potential employer."

He applied for a job in the foreign service when he was 32 and was told that he was too old. Now the government (at least on paper) no longer discriminates on the basis of age. But Calhamer has lost interest. "I get paid more to deliver the mail than a starting diplomat would earn," he says.

Ironically, his game is now played avidly by members of the diplomatic corps during the long, dull nights in quiet embassies (there are still a few) overseas. It was the favorite game in the Nixon White House at about the time Calhamer took his permanent "emergency" government job.

All worthwhile games (even the childish hide-and-seek) are representations of life, but the classics crystallize the feelings and fantasies of a particular time and place in a way that can speak to all humanity -- anywhere, anytime.

Chess, with its rigid class system of kings, queens, knights and bishops, is feudal Europe, and it has about it an air of chivalry. There are no secrets, no structural element of chance -- everything you need to know is right there on the board, and you win through clarity and depth of perception. It will live as long as young men fantasize themselves in the role of Sir Lancelot.

Monopoly is America (specifically Atlantic City) of the Depression era, and it will live as long as economies get depressed or people get greedy. It is won through sheer acquisitive instinct and dumb luck -- a toss of the dice or the possession of a card that can send you to jail, make you rich or give you second prize in a beauty contest. The late Joe Kennedy might be a fantasy role model for its players.

Diplomacy emulates the world just before World War I, but its psychological climate feels like the late 20th century. It is played by people who would like to be Henry Kissinger. It is blessedly free of terrorists and nuclear weapons, but otherwise the atmosphere is familiar: raw power, shifting loyalties, psychological warfare and a minimum of moral scruples. Its patron saint is Niccolo Machiavelli.

In tournament Diplomacy, moving the pieces takes only three minutes per round. The secret negotiations between players (shifting alliances, espionage and subtle or blatant forms of betrayal) take 15. Some players steal other players' pieces off the board -- or put on added pieces of their own -- when nobody is watching. These are the ones who believe that "anything not explicitly forbidden is permitted," but purists frown on that theory, and perpetrators are punished -- if they are caught.

According to the printed rules, the game's dirty tricks should be purely verbal: bargaining, planning joint military operations, spreading rumors, denouncing, threatening, etc. "A player may say anything he wishes," the rules specify. "The rules do not bind a player to anything he says."

"You can also eavesdrop," according to Calhamer. "You can hide under a table to hear a conversation. Some players have actually done it."

And lying among players is taken for granted. "To enforce the agreements you would have to incorporate the whole corpus of international law into the rules," he says, "and the game would last forever."

Some players act as though they might like that.

Diplomacy players are a select group, including some who take a professional interest in real diplomacy. And some give the game everything they have.

Fred Davis of Baltimore was a claims evaluator for the Social Security Administration but took early retirement so he could devote full time to publishing a newsletter (Bushwacker, now in its 175th issue) and running a Mensa group that plays Diplomacy by mail.

Davis also collects variant forms of the game (he has more than 700) and shows them to Calhamer, who doesn't like them very much. "The game now has an internal harmony," he says. "Any change could disrupt it."

According to the inventor, the game appeals mostly to men in their twenties and thirties, but about 1 out of 8 players is a woman.

"We have a higher percentage of women in Diplomacy than in chess, because you win by cooperating," said one (male) player.

"Yeah," chimed in another, "but if you have too much cooperation, the game stinks."

If everybody plays prudently and players cooperate sincerely, the game usually ends in a draw, with perfectly balanced powers. "Won games are always a victory of self-interest over balance of power," Calhamer says.

In any case, one of America's most respected Diplomacy players is Kathy Byrne of New York. Some men complain that she uses feminine wiles in negotiating -- which is perfectly permissible. All concede that she is a real killer, perennially voted the best mail Diplomacy player.

Most games are played by mail. People come to tournaments, according to Calhamer, "to see the people they play with all year."

Moves are sent to a referee, who sends each player a diagram of the new position after each round. Calhamer probably carries a lot of Diplomacy correspondence on his daily rounds, including forged letters (which are permissible, naturally) and routine correspondence. There are also 75 American and 50 British magazines and newsletters devoted to the game.

All the players are "very individualistic people, opposed to rigid structures," according to Calhamer, and their professions include engineering, computer technology and military operations.

They are also people with lots of time on their hands. A game takes a minimum of four hours, and some have been known to run for 16; the average time for a good game is probably eight or nine hours. Postal games take,2

Calhamer likes to watch others play but doesn't participate much any more because he is so highly respected.

"Wherever I go to play," he says, "they know that I invented the game." What is his reward for being the creator? "I might have five other players gang up and jump on me at once."

So he plays chess or go, in which he faces only one opponent at a time.