Stability of Compromise in Strategic Interactions
Consider a strategic interaction where two players must choose one of two actions. There are two potential outcomes where both players are better off than if they fail to coordinate. However, Player A strongly prefers the first of these successful outcomes, while Player B strongly prefers the second. If they fail to coordinate, they both end up with the worst possible result. Briefly explain why a simple agreement to 'split the difference' or compromise might not be a stable solution in this type of situation.
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