. The table below states the payoffs in political points (measured in billions of rubles) to two nations that are rivals in world politics, Russia and Ukraine. Each country can take one of two courses: peace; or war. In each cell, the first payoff is for Russia, and the second payoff is for Ukraine.
(a) Assume that neither country observes the military strategy of its rival, and solve the game (if it can be solved). Explain your solution step-by-step. Does this outcome maximize total political points?
(b) In general, what is a Nash equilibrium? Is the solution to this game a Nash equilibrium?
(c) Suppose that each country deposits a fund of two billion rubles with the United Nations. Either country would forfeit this fund if it wages war. What is the solution now to the game? Is this a Nash equilibrium?
Russia, Ukraine
Peace
War
4,4
1, 5
5, 1
2,2
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