Question 2 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 doesn't 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 2 TEEN 1 Veer Don't Veer 2,2 3,1 Veer 1,3 0,0 Don't Veer 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. d) Suppose the game is played sequentially with teen A moving first and committing to this action by throwing away the steering wheel. What are teen B's contingent strategies? Write down the normal and extensive forms for the sequential version of the game. e) Using the normal form for the sequential version of the game, solve for the Nash equilibria. f) Identify the proper sub games in the extensive form for the sequential version of the game. Use backward induction to solve for the sub game-perfect equilibrium. Explain

Question 2 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 doesn't 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 2 TEEN 1 Veer Don't Veer 2,2 3,1 Veer 1,3 0,0 Don't Veer 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. d) Suppose the game is played sequentially with teen A moving first and committing to this action by throwing away the steering wheel. What are teen B's contingent strategies? Write down the normal and extensive forms for the sequential version of the game. e) Using the normal form for the sequential version of the game, solve for the Nash equilibria. f) Identify the proper sub games in the extensive form for the sequential version of the game. Use backward induction to solve for the sub game-perfect equilibrium. Explain

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter8: Game Theory

Section: Chapter Questions

Problem 8.3P

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