Asked by Daniel

Policy makers in Washington, D.C., face a dilemma. On the one hand they can try to
pressure the Iraqi government into trying to disarm the militias. If the effort to disarm the
militias succeeds, this might put an end to the sectarian violence and bring some sort of
stability to Iraq. If the efforts fail, there will be even more violence and a still more
gruesome civil war. How likely any attempt to disarm the militias is to succeed depends on
the strength of the Iraqi government. The stronger it is, the more likely these efforts are to
succeed.
In the game below, the US decides how much pressure (p) to exert on the Iraqi
government (e.g., threatening to set a fixed timetable for withdrawing American troops).
The Iraqi government then decides whether to attempt to disarm the militias or not. If the
government does try to disarm the militias, then these efforts succeed with probability δ.
The stronger the government, the higher the value of δ and the more likely the government
is to be able to disarm the militias and avoid a full-scale civil war.
/ Civil War = -100,-100
/1-delta
N
\ delta
\ militias disarmed = 50,50
100 attempt to disarm
/ /
US P.......
\ \
0 Not disarm -20-p, 80-p

QUESTION
If delta = .8, what is the subgame perfect equilibrium of this game? (Assume that Iraq accepts
and attempts to disarm if it is indifferent between attempting to disarm and not.)

Answers

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