Let's take a closer look at our game here. We first establish notation. $X_1X_2X_3$ represents the situation where 3 players are still alive, and it is $X_1$'s turn first, then $X_2$, etc. $X_1X_2$ represents the situation where there are two players alive, and it's $X_1$'s turn to shoot.
First, let's think about who dies first. In order for $A$ to win, either $C$ or $B$ has to die first. What is the probability of that?
We know that when all three players are alive, there are three possible states we can be in
So when a player dies, the states we can be in are
We clearly don't care about the $BC$ case since $A$ is dead, so let's consider what the probability of reaching either the first or third case is.
- The case of $AB$.
We know that this can only be reached from the state of $BCA$ when $B$ successfully shoots. The probability of reaching state $BCA$ is $\frac12$ (if $A$ misses his first shot) $+\frac12\cdot\frac14\cdot\frac12\cdot\frac12$ (if $A,B,C$ all miss their first shot, and $A$ misses his second) $+ (\frac12\cdot\frac14\cdot\frac12)^2\cdot\frac12$ etc etc. We can use the formula for a geometric sequence to find this sum, which equals $\frac{8}{15}$. From this state, we know that the probability of $B$ hitting $C$ is $0.75$, so the total probability of getting to $AB$ is $\color{red}{\frac25}$.
- The case of $CA$.
We can apply a similar set of arguments, except to find the probability of reaching $ABC$, to find that probability of reaching $ABC$ is $\frac{16}{15}$. Before you yell at me for doing some pseudo-math, we should realize that since $ABC$ is the starting point for this game, this probability should only be used as an intermediate step. From there, the probability of $A$ shooting is $\frac12$, so the probability of the game reaching the state $CA$ is $\color{red}{\frac8{15}}$.
Now, let's take each of these two cases, and find the probability that $A$ survives in both.
- $AB$
Since $A$ shoots first, the probability of $A$ winning is $$\frac12+(\frac12\cdot\frac14)\cdot\frac12+(\frac12\cdot\frac14)^2\cdot\frac12...=\color{red}{\frac47}$$
- $CA$
Since $C$ shoots first, the probability of $A$ winning is $$\frac12\cdot\frac12+(\frac12\cdot\frac12)\cdot\frac12\cdot\frac12+(\frac12\cdot\frac12)^2\cdot\frac12\cdot\frac12+...=\color{red}{\frac13}$$
So, our final answer is $$\frac25\cdot\frac47+\frac8{15}\cdot\frac13=\color{red}{\frac{128}{315}}$$