The game of Chicken is played by two 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. Team 2 VeerDoes not veerTeam 1Veer2, 21, 3Does not veer3, 10, 0The first payoff number is for Teen 1 and the second number is for Teen 2. a) Does any of the players has a dominant strategy?b) Find the pure-strategy Nash equilibrium or equilibria.c) Suppose the game is played sequentially. Find the Nash equilibrium.

Answered: The game of Chicken is played by two…

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 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.

	Team 2
	Veer	Does not veer
Team 1	Veer	2, 2	1, 3
Does not veer	3, 1	0, 0

The first payoff number is for Teen 1 and the second number is for Teen 2.

a) Does any of the players has a dominant strategy?

b) Find the pure-strategy Nash equilibrium or equilibria.

c) Suppose the game is played sequentially. Find the Nash equilibrium.

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