2. Assume the presence of linear single peaked utility functions, i.e. utility f

Question

2. Assume the presence of linear single peaked utility functions, i.e. utility functions in which the utility to an individual from a policy outcome is declining in a linear fashion as you move away from his ideal point. The ideal points of the US president (Xu) and the ideal point of the Russian president (Xr) on a given issue continuum are displayed below The status quo is at 0.1, and US president proposes a policy at 0.29. Will the Russian president accept? Why or why not? Xr-0.2 Xu=0.4 3. In the game below the US president is deciding whether or not to invade Iran. In response the Iranian leader decides whether to fight back or cooperate with the US. The Iranian leader however is not certain of whether the US president is strong or weak. (60,40) Inv Iran Fight Back(-10,0) US Stron Invade I (40,40) Nature 0,300) Iran Fight Back-(-10,90) Weak US (-11,300) a) Is (InvadelStrong. Invade Weak; Fight Back Invade; p (StronglInvade-1) a Perfect Bayesian equilibrium? Why or why not? b) Is (Invade Strong, Invade Weak; Fight Back Invade; p (Strong Invade-,8) a Perfect Bayesian equilibrium? Why or why not? You must show all the necessary calculations to get any points. c) Is (Not Invade Strong, InvadelWeak; Fight Back Invade; p (Weak Invade 1) a Perfect Ba calculations to get any points. (5 points) yesian Equilibrium? Once again you must show all necessary

Explanation / Answer

2. The russian president will accept because the utility is more after the proposal as the location under proposal is less distant from its prefered location than its original position.

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