3.8 A thug wants the contents of a safe and is threatening the owner, the only person who knows the code, to open the safe. “I will kill you if you don’t open the safe, and let you live if you do.”

Should the information holder believe the threat and open the safe? The table shows the value that each person places on the various possible outcomes.

Such a game appears in many films, including Die Hard, Crimson Tide, and The Maltese Falcon.

a. Draw the game tree. Who moves first?

b. What is the equilibrium?

c. Does the safe’s owner believe the thug’s threat?

d. Does the safe’s owner open the safe?

Transcribed Image Text:

Open the safe, thug does not kill Open the safe, thug kills Do not open, thug kills Do not open, thug does not kill Safe's Thug Owner 4 3 2 1 1 2 3 4