If ExxonMobil invests in Venezuela's oil fields, it runs the risk that Venezuela will later partially nationalize the assets. The payoffs are represented in the game tree illustrated in the figure to the right. Suppose that the parties could initially agree to a binding contract that Venezuela would pay ExxonMobil x dollars if it nationalizes the oil fields. How large does x have to be for ExxonMobil to invest in Venezuela? The value of x would have to be at least equal to $ for ExxonMobil to invest in Venezuela. (Enter your response as a whole number.) Venezuela ExxonMobil Elsewhere Nationalize Government -(24,96) -(60,60) Don't nationalize -(30,0)

If ExxonMobil invests in Venezuela's oil fields, it runs the risk that Venezuela will later partially nationalize the assets. The payoffs are represented in the game tree illustrated in the figure to the right. Suppose that the parties could initially agree to a binding contract that Venezuela would pay ExxonMobil x dollars if it nationalizes the oil fields. How large does x have to be for ExxonMobil to invest in Venezuela? The value of x would have to be at least equal to $ for ExxonMobil to invest in Venezuela. (Enter your response as a whole number.) Venezuela ExxonMobil Elsewhere Nationalize Government -(24,96) -(60,60) Don't nationalize -(30,0)

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter8: Game Theory

Section: Chapter Questions

Problem 8.9P

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