The US and China are both thinking of investing in expensive new fighter planes.

Question

The US and China are both thinking of investing in expensive new fighter planes. These planes are most useful if the other country does not have the new planes. However, neither country wants to be in the situation where the other country has invested in the planes and they have not. The following table shows their payoffs in the different possible outcomes. If the 2 countries do not cooperate, then (US, China) China US Invest Don't Invest Invest (-100, -100) (150, -200) Don't Invest (-200, 150) (0,0) neither countries will invest both countries will invest China will invest, but the US will not invest the US will invest, but China will not The US and China are both thinking of investing in expensive new fighter planes. These planes are most useful if the other country does not have the new planes. However, neither country wants to be in the situation where the other country has invested in the planes and they have not. The following table shows their payoffs in the different possible outcomes. If the 2 countries do not cooperate, then (US, China) China US Invest Don't Invest Invest (-100, -100) (150, -200) Don't Invest (-200, 150) (0,0) neither countries will invest both countries will invest China will invest, but the US will not invest the US will invest, but China will not The US and China are both thinking of investing in expensive new fighter planes. These planes are most useful if the other country does not have the new planes. However, neither country wants to be in the situation where the other country has invested in the planes and they have not. The following table shows their payoffs in the different possible outcomes. If the 2 countries do not cooperate, then (US, China) China US Invest Don't Invest Invest (-100, -100) (150, -200) Don't Invest (-200, 150) (0,0) neither countries will invest both countries will invest China will invest, but the US will not invest the US will invest, but China will not (US, China) China US Invest Don't Invest Invest (-100, -100) (150, -200) Don't Invest (-200, 150) (0,0) neither countries will invest both countries will invest China will invest, but the US will not invest the US will invest, but China will not (US, China) China

Explanation / Answer

China will invest, but the US will not invest

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