Two California teenagers Bill and Ted are playing Chicken. Bill drives his hot rod south down a one-lane road, and Ted drives his hot rod north along the same road. Each has two strategies: Stay or Swerve. If one player chooses Swerve he loses face; if both swerve, they both lose face. However, if they both choose Stay, they are both killed. The payoffs for the game of Chicken are given in the table below. Bill is the row player and Ted is the column player.   Stay Swerve Stay -3, -3 2, 0 Swerve 0, 2 1, 1   (i) Find all pure strategy Nash equilibria. (ii) Find the mixed strategy Nash equilibrium. (iii) What is the probability that both teenagers will survive?

Managerial Economics: A Problem Solving Approach
5th Edition
ISBN:9781337106665
Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Chapter15: Strategic Games
Section: Chapter Questions
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(A) Two California teenagers Bill and Ted are playing Chicken. Bill drives his hot rod south down a one-lane road, and Ted drives his hot rod north along the same road. Each has two strategies: Stay or Swerve. If one player chooses Swerve he loses face; if both swerve, they both lose face. However, if they both choose Stay, they are both killed. The payoffs for the game of Chicken are given in the table below. Bill is the row player and Ted is the column player.

  Stay Swerve
Stay -3, -3 2, 0
Swerve 0, 2 1, 1

 

(i) Find all pure strategy Nash equilibria.

(ii) Find the mixed strategy Nash equilibrium.

(iii) What is the probability that both teenagers will survive?

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