Consider the following static, single-shot game played between two cyclists, Chico and Loco, who find themselves riding towards each other down a narrow lane. Chico wants to pass by safely, and he can only do this by cycling on the opposite side of the lane to Loco. So, he has two options: to cycle on the Right of the lane, or to cycle on the Left. Loco meanwhile is having a bad day and wants to crash into Chico, and the way he can achieve this is by cycling on the same side of the lane as Chico. So again, he has two options: to cycle on the Right of the lane, or to cycle on the Left. He does not care at all about hurting himself if they collide. (c) By constructing the best response lines of both players, identify all Nash equilibrium outcomes in the above game i.e., in pure and mixed strategies. (d) Provide an intuitive interpretation of the equilibrium outcome(s) identified in part (c) above.
Consider the following static, single-shot game played between two cyclists, Chico and Loco, who find themselves riding towards each other down a narrow lane. Chico wants to pass by safely, and he can only do this by cycling on the opposite side of the lane to Loco. So, he has two options: to cycle on the Right of the lane, or to cycle on the Left. Loco meanwhile is having a bad day and wants to crash into Chico, and the way he can achieve this is by cycling on the same side of the lane as Chico. So again, he has two options: to cycle on the Right of the lane, or to cycle on the Left. He does not care at all about hurting himself if they collide.
(c) By constructing the best response lines of both players, identify all Nash equilibrium outcomes in the above game i.e., in pure and mixed strategies.
(d) Provide an intuitive interpretation of the equilibrium outcome(s) identified in part (c) above.
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