Question #1.13 Two guys (suffering from testosterone poisoning) engage in the ga

Question

Question #1.13

Two guys (suffering from testosterone poisoning) engage in the game of chicken. They drive toward each other in the middle of a road. As they approach the impact point, each has the option of continuing to drive down the middle of the road or to swerve. Both believe that if only one driver swerves, that driver loses face (payoff = 0) and the other gains in self-esteem (payoff = 2). If neither swerves, they are maimed or killed (payoff = -10). If both swerve, no harm is done to either (payoff = 1). Show the payoff matrix for the two drivers engaged in this game of chicken. Determine the Nash equilibria for the game. M Modify the payoff matrix in the game of chicken in Exercise 1.13 so that the payoff is -2 if neither driver swerves. How does the equilibrium change? M In the novel and film The Princess Bride, the villain Vizzini kidnaps the princess. In an attempt to rescue her, the hero, Westley, challenges Vizzini to a

Explanation / Answer

The Nash equilibrium here is (0,2)(2,0)

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