It may be unlikely, but it's not logically impossible.

Assume it is, as part of the problem statement. Only allow agent-consistency (the agent can't prove otherwise) of it being possible for the other player to not blackmail, without allowing actual logical consistency of that event. Also, assume that our agent has actually observed that the other decided to blackmail, and there is no possibility of causal negotiation.

(This helps to remove the wiggle-room in foggy reasoning about decision-making.)