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lets assume that China's utility if it attacks Taiwan and the U.S. does not intervene is 1500. However, If China attacks and the S intervenes,
lets assume that China's utility if it attacks Taiwan and the U.S. does not intervene is 1500. However, If China attacks and the S intervenes, Chinas utility is -1200. China's utility from the status quote is 0. The cost of an attack is 200. Assume the China believes that the probability that the US would intervene is 0/40. What will. a rational and risk neutral Ch9ia do? Explain why
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