Question
A has a probability of defeating B equal to 0.80 (so B's probability of defeating A is 0.20). If A wins a war with B,
A has a probability of defeating B equal to 0.80 (so B's probability of defeating A is 0.20). If A wins a war with B, then A gets all of the disputed land (and B has none). If A loses to B then A gets none of the disputed land (so B has it all). Assume that the war will cost A an amount equal to the value of 20% of the land. [Technical note: Assume utilities are linear with value so that, for instance, 10% of land has a utility of 10; 80 percent of land has a utility of 80 and so forth.] What is A's expected utility from waging war against B?
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Development Economics
Authors: Gérard Roland
1st Edition
0321464486, 9780321464484
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