While attempting this problem I thought that P1 would simply be Bromine getting substituted by OH through nucleophilic substitution.
P2 would give a product formed through ring expansion as a 4 membered ring would tend to rearrange to a 5 membered ring due to strain factors.(SN1 reaction(acidic conditions))
This is the mechanism I thought of:
This pointed towards option (2) but what's given is option (3).
Why does this happen?
It could be that the four-membered ring being strained rearranges, as Waylander suggests but if it would rearrange, why would it rearrange into a 3 membered ring?
Usually, this happens only when there is a stabilising factor and the only stabilising factor related to a 3 membered ring I can think of, is sigma bond resonance(Dancing resonance)
I would appreciate an explanation of what's happening here.