Let us think of the issue as the proportion of Czechoslovak territory given to Germany. Possible outcomes can be plotted on a single dimension, where 0 implies that Germany obtains no territory and 1 implies that Germany obtains all of Czechoslovakia: Most countries at Munich (“Allies” for short) wish to give nothing to Germany: their ideal point is 0, which gives them utility of 1. Their worst possible outcome is for Germany to take all of Czechoslovakia; hence an outcome of 1 gives them utility of 0. In between these extremes, the Allies could propose a compromise, X, which gives them utility of 1 – X. The question for the Allies is whether to propose a compromise or fight a war with Germany, which they are sure will ensue if they offer nothing. If they propose a compromise and Germany accepts, they get a payoff of 1 – X. If they fight, they win with probability p and lose with probability 1 – p. If they win, they get their ideal outcome (0) but pay a cost of .2; the payoff for winning is thus .8. If they lose, they get their worst outcome (1) and still pay a cost of .2; the payoff for losing is thus -.2. Germany faces a symmetric situation. Germany’s utility from a compromise is simply X, since Germany’s utility rises with the proportion of territory it receives. If Germany fights, it wins with probability (1 – p) and loses with probability p. If Germany wins, it gets its ideal outcome (1) but pays a cost of .2, so its payoff for winning is .8. If it loses, it gets its worst outcome (0) and still pays a cost of .2, so its payoff for losing is -.2. QUESTION: Suppose the Allies’ probability of winning (p) remains .6. What range of compromises would Germany consider preferable to risking a war? Group of answer choices X > .2 X > .3 X > .4 X > .5 X > .6
Let us think of the issue as the proportion of Czechoslovak territory given to Germany. Possible outcomes can be plotted on a single dimension, where 0 implies that Germany obtains no territory and 1 implies that Germany obtains all of Czechoslovakia:
Most countries at Munich (“Allies” for short) wish to give nothing to Germany: their ideal point is 0, which gives them utility of 1. Their worst possible outcome is for Germany to take all of Czechoslovakia; hence an outcome of 1 gives them utility of 0. In between these extremes, the Allies could propose a compromise, X, which gives them utility of 1 – X.
The question for the Allies is whether to propose a compromise or fight a war with Germany, which they are sure will ensue if they offer nothing. If they propose a compromise and Germany accepts, they get a payoff of 1 – X. If they fight, they win with
Germany faces a symmetric situation. Germany’s utility from a compromise is simply X, since Germany’s utility rises with the proportion of territory it receives. If Germany fights, it wins with probability (1 – p) and loses with probability p. If Germany wins, it gets its ideal outcome (1) but pays a cost of .2, so its payoff for winning is .8. If it loses, it gets its worst outcome (0) and still pays a cost of .2, so its payoff for losing is -.2.
QUESTION:
Trending now
This is a popular solution!
Step by step
Solved in 2 steps with 1 images
