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22.3 Credible Threats In the following game of international diplomacy, Freedonia must decide whether to make a treaty with a tiny country known as the
22.3 Credible Threats In the following game of international diplomacy, Freedonia must decide whether to make a treaty with a tiny country known as the Duchy of Grand Fenwick. After observing Freedonia's decision, a thrird country, Ruritania, must decide whether to attack Grand Fenwick or not. If Freedonia has no treaty with Grand Fenwick, and Ruritania attacks, then Freedonia must choose whether to come to the aid of the tiny country or ignore Ruritania's aggression. But if Freedonia has already made a treaty with Grand Fenwick, then Freedonia will have no other choice but to defend it from Ruritania. The payoffs of this game are given in the figure below. Freedonia No Treaty Treaty Ruritania Ruritania Don't Attack Attack Attack Don't Attack Freedonia Defend Ignore O Using backward induction, find the Subgame Perfect Nash Equilibrium
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