Question
Two robbers have just robbed a bank and are in a hotel room with a suitcase of money worth 100 million dollars. Each would prefer
Two robbers have just robbed a bank and are in a hotel room with a suitcase of money worth 100 million dollars. Each would prefer to have the whole amount to himself rather than to share it. They are armed with pistols, but their shooting skills are not that great. Specifically, if they shoot, R1 and R2 have 20% and 40% chances of killing their target, respectively. Each has only one bullet left. First, R1 decides whether to shoot. If he shoots, then R2, if alive, decides whether to shoot. If R1 decides not to shoot, then R2 decides whether to shoot. The survivors split the money equally.
(a) show this game in extensive form.
(b) Find a subgame-perfect equilibrium.
(c) show this game in normal form.
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