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Show your work (you must show what your response is based on to receive full credit} 1. Two countries, A and B, have a conict
Show your work (you must show what your response is based on to receive full credit} 1. Two countries, A and B, have a conict 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 '5 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 x and Country B's utility function is 1-1 and, where x 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. Assume that the costs of war are 0.15 for each country. Suppose country A has a probability of winning the war of 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) Is there an area of overlap of these two ranges? If so, what is the bargaining range? (1) Is one country in a better bargaining position? If so, which country and why
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