Question
Two countries A and B are separated by a riveron which an islandlies. Both countries lay claim to ownership of the island,yet currently the country
Two countries A and B are separated by a riveron which an islandlies. Both countries lay claim to ownership of the island,yet currently the country B occupies the island. Country A must decide whether to attack the occupied island. If this happens, country B can defend the island or withdraw its army over a bridge, thereby giving up the island. Both countries prefer owning the island to not owning it, but war is the worst outcome for both of them.
a)Give the extensive-form representation of the game.
b)Give the normal-form representation of the game and find all (pure-strategy) Nash equilibria
.c)Find all subgame perfect Nash equilibria of the game.
d)Assume that B could choose to destroy thebridge. Discuss the impact on the subgame perfect Nash equilibria.
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