The game of Chicken is played by two macho teens who speed toward each other on a single-lane road. The first to veer branded the chicken, whereas the one who does not veer gains peer-group esteem. Of course, if neither veers, both die in the resulting crash. Payoffs to the Chicken game are provided in the following table. Teen 1 Veer Does not veer Teen 2 Veer 2,2 3,1 Does not veer 1,3 0,0 a. Draw the extensive form. b. Find the pure-strategy Nash equilibrium or equilibria. c. Compute the mixed-strategy Nash equilibrium. As part of your answer, draw the best-response function diagram for the mixed strategies.

The game of Chicken is played by two macho teens who speed toward each other on a single-lane road. The first to veer branded the chicken, whereas the one who does not veer gains peer-group esteem. Of course, if neither veers, both die in the resulting crash. Payoffs to the Chicken game are provided in the following table. Teen 1 Veer Does not veer Teen 2 Veer 2,2 3,1 Does not veer 1,3 0,0 a. Draw the extensive form. b. Find the pure-strategy Nash equilibrium or equilibria. c. Compute the mixed-strategy Nash equilibrium. As part of your answer, draw the best-response function diagram for the mixed strategies.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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The game of Chicken is played by two macho teens who speed toward each other on a single-lane road. The first to veer off is
branded the chicken, whereas the one who does not veer gains peer-group esteem. Of course, if neither veers, both die in the
resulting crash. Payoffs to the Chicken game are provided in the following table.
Teen 1
Veer
Does not veer
Teen 2
Veer
2,2
3, 1
Does
not veer
1,3
0,0
a. Draw the extensive form.
b. Find the pure-strategy Nash equilibrium or equilibria.
c. Compute the mixed-strategy Nash equilibrium. As part of your answer, draw the best-response function diagram for the
mixed strategies.

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Step 1: Introduce the concept

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Step 2: Draw the Extensive Form Game and Find the Pure-Strategy Nash Equilibrium

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Step 3: Find the Mixed-Strategy Nash Equilibrium and Draw the Best-Response Function

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