In the incomplete information version of the Game of Chicken (see Tadelis 2013, Section 12.2.1), players 1 and 2 drive toward each other and just before impact they simultaneously decide whether to swerve to the right or continue driving head-on." If both play chicken, each gets a payoff of 0. If i continues to drive while j # i plays chicken, then i get a payoff of 8 and j gets a payoff of 0. Finally, if both continue to drive head-on, then each gets 4 – k, where k represents the cost to each player. k could be, with equal probability, either high or low. While the distribution of type is common knowledge, none of the two players knows whether the cost to the other player is high or low. 1. Denoting the high cost with H and the low cost with L, draw the extensive form of the game. 2. Assuming H= 16 and L = 0, derive from the extensive form the normal form, and find the unique pure-strategy Bayesian Nash equilibrium.
In the incomplete information version of the Game of Chicken (see Tadelis 2013, Section 12.2.1), players 1 and 2 drive toward each other and just before impact they simultaneously decide whether to swerve to the right or continue driving head-on." If both play chicken, each gets a payoff of 0. If i continues to drive while j # i plays chicken, then i get a payoff of 8 and j gets a payoff of 0. Finally, if both continue to drive head-on, then each gets 4 – k, where k represents the cost to each player. k could be, with equal probability, either high or low. While the distribution of type is common knowledge, none of the two players knows whether the cost to the other player is high or low. 1. Denoting the high cost with H and the low cost with L, draw the extensive form of the game. 2. Assuming H= 16 and L = 0, derive from the extensive form the normal form, and find the unique pure-strategy Bayesian Nash equilibrium.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
Related questions
Question
![In the incomplete information version of the Game of Chicken (see Tadelis 2013, Section 12.2.1), players 1 and 2 drive toward each
other and just before impact they simultaneously decide whether to swerve to the right or continue driving head-on. If both play
chicken, each gets a payoff of 0. If i continues to drive while j i plays chicken, then i get a payoff of 8 and j gets a payoff of 0.
Finally, if both continue to drive head-on, then each gets 4 – k, where k represents the cost to each player. k could be, with equal
probability, either high or low. While the distribution of type is common knowledge, none of the two players knows whether the cost to
the other player is high or low.
1. Denoting the high cost with H and the low cost with L, draw the extensive form of the game.
2. Assuming H= 16 and L = 0, derive from the extensive form the normal form, and find the unique pure-strategy Bayesian Nash
equilibrium.
1. The Game of Chicken is not played just between teenagers in films; it is relevant whenever optimal behaviour depends on
some combination of each player's tendency to be aggressive and his belief about his opponent's tendency to be
aggressive.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F1d3aee95-c6ff-4c42-8cbb-2059c4522661%2Fbd734e3e-745f-40c8-b01b-40a6ed57f184%2Fssv4kdb_processed.png&w=3840&q=75)
Transcribed Image Text:In the incomplete information version of the Game of Chicken (see Tadelis 2013, Section 12.2.1), players 1 and 2 drive toward each
other and just before impact they simultaneously decide whether to swerve to the right or continue driving head-on. If both play
chicken, each gets a payoff of 0. If i continues to drive while j i plays chicken, then i get a payoff of 8 and j gets a payoff of 0.
Finally, if both continue to drive head-on, then each gets 4 – k, where k represents the cost to each player. k could be, with equal
probability, either high or low. While the distribution of type is common knowledge, none of the two players knows whether the cost to
the other player is high or low.
1. Denoting the high cost with H and the low cost with L, draw the extensive form of the game.
2. Assuming H= 16 and L = 0, derive from the extensive form the normal form, and find the unique pure-strategy Bayesian Nash
equilibrium.
1. The Game of Chicken is not played just between teenagers in films; it is relevant whenever optimal behaviour depends on
some combination of each player's tendency to be aggressive and his belief about his opponent's tendency to be
aggressive.
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