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Question 1 for reference was: Two countries, A and B, have a conflict over a common border. The border can take values from zero to
Question 1 for reference was: "Two countries, A and B, have a conflict over a common border. The border can take values from zero to one, inclusive, where x is the percentage of the disputed territory under Country A's control. The status quo border is normalized to one, which is Country A's ideal point. Country B's ideal point for the border is 0. Country A's utility function is r and Country B's utility function is 1-x and, where r is the point at which the border is actually set. If the two countries go to war over the border dispute, the winner will set the border at its ideal point."
3. Assume the parameters in question 1 except that A's costs of war are only 0.05. (Country's B's costs of war are still 0.15 and its probability of winning the war is 0.50). a) What is A's expected utility of war? What is the range of bargains that A would accept to avoid war? b) What is B's expected utility of war? What is the range of bargains that B would accept to avoid war? c) What is the bargaining range? d) Is one country in a better bargaining position? If so, which country and whyStep by Step Solution
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