Two taxi drivers, Row and Column, are driving toward each other on a one-lane road. Each driver chooses simultaneously between going straight (S), swerving left (L), and swerving right (R). If one driver goes straight while the other swerves, either right or left, the one who goes straight gets payoff 3 while the other gets -1. If each driver swerves to his left, or each swerve to his right, then each gets 0 (remember, they are going in opposite directions). If both go straight, or if one swerves to his left while the other swerves to his right, then the cars crash and each gets payoff -4. a. Write the payoff matrix for this game b. Find all of the game's Nash equilibria in pure strategies.
Two taxi drivers, Row and Column, are driving toward each other on a one-lane road. Each driver chooses simultaneously between going straight (S), swerving left (L), and swerving right (R). If one driver goes straight while the other swerves, either right or left, the one who goes straight gets payoff 3 while the other gets -1. If each driver swerves to his left, or each swerve to his right, then each gets 0 (remember, they are going in opposite directions). If both go straight, or if one swerves to his left while the other swerves to his right, then the cars crash and each gets payoff -4. a. Write the payoff matrix for this game b. Find all of the game's Nash equilibria in pure strategies.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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