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Consider an agreement between France and Germany that will restrict wine production so that maximum economic profit can be realized. The possible outcomes of the

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Consider an agreement between France and Germany that will restrict wine production so that maximum economic profit can be realized. The possible outcomes of the agreement are presented in the table below. Germany complies Germany defaults France complies France gets 68 billion France gets C2 billion Germany gets E8 billion Germany gets E10 billion France defaults France gets E10 billion France gets 64 billion Germany gets E2 billion Germany gets E4 billion Based on the game theory framework, the most likely strategy followed by the two countries with respect to whether they comply with or default on the agreement will be: O Germany will default; France will comply. O Germany will comply: France will default. O Both countries will default. O Both countries will comply

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