1.2 Some examples

The expected cost depends upon two factors:
1. The probability of being caught and convicted
2. The severity of the punishment

What are the consequences of different court rulings?
1. Dispute litigants- resolves the dispute between litigants
2. Rule creation- it guides future parties who are in similar circumstances about how courts might resolve their dispute.

How can the court decide in case of (prisoners) dilemma-game theory?
The answer depends on whether or not X and Y can cooperate.

When cooperation is possible --> bargaining --> split the (joint) gain --> cheaper means efficiency achieved.