Pleas explain your answers thoroughly. Show any calculation, formulas and how you came to your answers. Document Preview:

AP-3
Chapter 13 Problem-15
Economists believe terrorists behave rationally: If country A(America) increases security efforts while country B(Britain) remains complacent, terrorists will focus their attacks on targets in the relatively less well-protected country B. Suppose the following payoff table shows the net benefits for the US and Great Britain according to their decisions either to maintain their annual spending levels at the optimal levels(when both countries spend proportionately equal amounts) or to increase annual spending to 10%. The payoffs in the table measure net benefits (in dollars) from antiterrorism activities, that is, the value of property not destroyed and lives not lost due to reduced terrorism minus spending on antiterrorism.
Britain’s antiterrorism spending
America’s
antiterrorism
spending
$100 per capita
$110 per capita
$100 per capita
A – $1000/$1000
B – $ /$
$110 per capita
C – $ /$
D – $ 800 /$800
Payoffs in millions of dollars of ne benefit annually.
Antiterrorism policy analysts believe allies in the war against terror face a prisoners’ dilemma concerning how much each country chooses to spend on activities that reduce the incidence of terrorist attacks on their own nation’s people and property. In the payoff table, make up your own values for payoffs in cells B and C that will create a prisoners dilemma situation.
“When all nations spend more and more preventing terrorist acts, they may actually all end up worse off for their efforts.” Evaluate this statement using the payoff table you created in part a.
AP-11
Chapter 13 – Problem 5
Thomas Schelling, an expert on nuclear strategy and arms control, observed in his book The Strategy of Conflict(Cambridge, MA: Harvard University Press, 1960), “The power to constrain an adversary depends upon the power to bind oneself.” Explain this statement using the concept of strategic commitment.
AP-15:
Formulate the following situation as an extensive…

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