Figure 9P-7 shows a sequential game in which one player decides whether to cause damage to the

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Figure 9P-7 shows a sequential game in which one player decides whether to cause damage to the property of (injure) another player. The injured player can then choose whether to sue, which involves costly legal fees.
Figure 9P-7 shows a sequential game in which one player

a. What is the predicted outcome in this €œgame€?
b. What is the predicted outcome if the injured party has made a binding commitment always to sue when injured?

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Microeconomics

ISBN: 978-1259163531

1st edition

Authors: Dean Karlan, Jonathan Morduch

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