It is possible to reconfigure the payoffs in the game in Exercise S3 so that the children’s statement in their ad is a threat, rather than a promise. (a) Redraw the tree from part
(a) of Exercise S3 and fill in payoffs for both players so that the children’s statement becomes a threat in the full technical sense.
(b) Define the status quo in your game, and determine whether the threat is deterrent or compellent.
(c) Explain why the threatened action is not automatically credible, given your payoff structure.
(d) Explain why the implied promise is automatically credible.
(e) Explain why the children would want to make a threat in the first place, and suggest a way in which they might make their threatened action credible.
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