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Set up the game where an investor chooses to invest in a project and the person running the project can choose to run away or
Set up the game where an investor chooses to invest in a project and the person running the project can choose to run away or perform well. Solve the game using backward induction and explain how the resulting outcome is Pareto dominated. Explain how external enforcement can cause a Pareto improvement in outcomes by changing the outcomes of the game.
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