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Consider the following game. Two countries (Country A and Country B) share a water source. Each country has the choice between diverting the water supply,
Consider the following game. Two countries (Country A and Country B) share a water source. Each country has the choice between diverting the water supply, or not diverting the water supply. If neither country diverts the water supply, they both receive a payoff of 0. If both countries divert they both receive a payoff of -1. If one country diverts and the other country does not, the country that diverts receives a payoff of 3 and the country that does not divert receives a payoff of -4. Assume Country A chooses its action first. a. Describe this game using both extensive form and normal form representations. b. Does either player have a dominant strategy? If so, what is it? c. Does this game have an equilibrium? If so, what is it? d. Regardless of your answer to part b, describe one example of a commitment device that could be used to incentivize both countries to choose not to divert the water supply
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