UNIVERSITY OF ILLINOIS URBANA-CHAMPAIGN DEPARTMENT OF ECONOMICS SATYA P. DA Spring 2016-17 Econ 490: Economics of War and Terrorism Problem Set #7: War Models Due by 04/20/2017 I. (20 points) Consider the Brito-Intriligator model. Attack periods are respectively 6 10 and 6s and counter-attack periods are y 12, 16. Country A files missiles at the rate a 20% and that for country B is B 15%. Accuracy rates are vu 409% and 50%. Threshold casualty levels are 100,000 150,000, 20,000, 40,000 in general, the following equations present acceptable casualty condition facing country A, 2) detemence inability condition facing country B, (3) acceptable casualty condition facing country A and (4) deterrence inability condition facing country A MA (0) VA Va (1-e Ava MA(0) Ma(0) e Avs M4 (0) Ms (0) (4) MA (0) MB(0) vs (1-e (a) (4 points) Computing the respective intercept and slope coefficients of each of these equations. b) (8 points Use Excel to draw the four lines and demarcate the zones of war initiation and mutual deterrence. [It will be easier to use the answers to part (a) rather than the above equations directly. Treat Ma(0) as the y variable and MA (0) as the x-variable. You have to generate an appropriate range for x so that the graphs come out nice. The following link may be of help: https://www youtube.com/watch?v ITgT3YPDeLs 1 (c) (4 points) suppose initial stockpiles of two countries are: MA(0) 600,000 and Ma(0) 85,000. Which zone does the combination belong to? (d) (4 points) In general consider a increase in da, ie country A thinks that the threshold casualty it must impose on country B in course of retaliation which would deter country B from attacking in the first place is now higher. Would it increase or decrease the chance of war and why? 2. (0 points) (a) In the Aumann's model of repeated games of War and Peace, suppose the payoff matrix War Peace Peace (100,100) War (300.20 (50.50) is the threshold, minimum, common discount factor for both countries (call it Ai) which What would make peace [(peace, peace) chosen by country A and country Bl a sustainable outcome UNIVERSITY OF ILLINOIS URBANA-CHAMPAIGN DEPARTMENT OF ECONOMICS SATYA P. DA Spring 2016-17 Econ 490: Economics of War and Terrorism Problem Set #7: War Models Due by 04/20/2017 I. (20 points) Consider the Brito-Intriligator model. Attack periods are respectively 6 10 and 6s and counter-attack periods are y 12, 16. Country A files missiles at the rate a 20% and that for country B is B 15%. Accuracy rates are vu 409% and 50%. Threshold casualty levels are 100,000 150,000, 20,000, 40,000 in general, the following equations present acceptable casualty condition facing country A, 2) detemence inability condition facing country B, (3) acceptable casualty condition facing country A and (4) deterrence inability condition facing country A MA (0) VA Va (1-e Ava MA(0) Ma(0) e Avs M4 (0) Ms (0) (4) MA (0) MB(0) vs (1-e (a) (4 points) Computing the respective intercept and slope coefficients of each of these equations. b) (8 points Use Excel to draw the four lines and demarcate the zones of war initiation and mutual deterrence. [It will be easier to use the answers to part (a) rather than the above equations directly. Treat Ma(0) as the y variable and MA (0) as the x-variable. You have to generate an appropriate range for x so that the graphs come out nice. The following link may be of help: https://www youtube.com/watch?v ITgT3YPDeLs 1 (c) (4 points) suppose initial stockpiles of two countries are: MA(0) 600,000 and Ma(0) 85,000. Which zone does the combination belong to? (d) (4 points) In general consider a increase in da, ie country A thinks that the threshold casualty it must impose on country B in course of retaliation which would deter country B from attacking in the first place is now higher. Would it increase or decrease the chance of war and why? 2. (0 points) (a) In the Aumann's model of repeated games of War and Peace, suppose the payoff matrix War Peace Peace (100,100) War (300.20 (50.50) is the threshold, minimum, common discount factor for both countries (call it Ai) which What would make peace [(peace, peace) chosen by country A and country Bl a sustainable outcome