Country B has threatened country A. If A does not give B a disputed port city on the border between the two countries, B will take the city by force. The leaders of A believe that there is a 0.4 probability that they can repel B’s army if it attacks. A’s value if it retains the port city is 8 and its value if it loses the port city is ?4. The leaders of A believe they have two choices: fight or capitulate. What is country A’s expected utility of "fight"?
a. 0.8
b. 2.4
c. 3.2
d. 5.6
Ans: a
Political Science
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