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Let's assume that there is now a coordination game that the governments are playing, and that in order to receive benefits of 2, both countries must act proactively. In the instance that only one government is proactive, it has a cost of 4 and thus, has a benefit of -4. This setup gives us a coordination game in normal form:
from Acre & Sandler Vol...
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In the instance that only one government is proactive, it has a cost of 4 and thus, has a benefit of -4. This setup gives us a coordination game in normal form:
from Acre & Sandler Vol. 34
The solution of this game has 2 different Nash equilibriums, with both countries acting preemptively or both reactively...
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Terrorism and Game theory
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