Final answer:
Neorealism would likely lead to states A and B agreeing to Agreement 2, where both states gain more while maintaining a relative balance, keeping in line with the theory's emphasis on power balance and system structure.
Step-by-step explanation:
According to the theory of neorealism (structural realism), states prioritize their own gains in an anarchic international system. Neorealism suggests that states act in a way that maximizes their relative power compared to other states. Therefore, when considering the two cooperative agreements, state A and state B would be more likely to agree to Agreement 2 where state A gains $5 and state B gains $7, rather than Agreement 1 where both states only gain $1 each. This is because Agreement 2 not only increases both states' gains but also maintains a balance between them, which may help in avoiding any unilateral advantage that might lead to instabilities. As neorealists focus on the balance of power and the structure of the international system over individual state intentions, the outcome that leads to increased and balanced capability between the states would be seen as preferable.