2. (10 points) Consider two countries, country X and country Y, that are involved in conflict. Each country chooses one of two actions: "Attack" or "Concede." The countries act simultaneously. Each country only cares about the territory that it controls and the costs incurred in fighting. Its payoff is (the size of the controlled territory) - (the cost of fighting). If both countries attack each other or both concede, then there are no gains or losses in territory and each one ends up controlling of the total (which equals 1). If one country attacks and the other one concedes, then the attacker captures an extra territory 0 < t 1/2 from the conceding party and ends up with + t. The other side ends up with - t. Attacking is costly only if the other side attacks as well. Denote this cost by C > 0. If the other side concedes there is no cost to launching an attack.

a) Represent this game in a normal form and fill in the payoffs (express payoffs in terms of parameters (t and C) provided in the text above).

b) Under what conditions on parameters can this game be viewed as a prisoner's dilemma? If this condition does not hold what type of 2x2 game is this?

c) Is it possible to find values for t and C, such that there is no Nash equilibrium involving a war conflict: (Attack, Attack)