Question

292 Part 3: Uncertainty and Strategy Shov 8.3 The game of Chicken is played by two macho teens who speed branded the chicken, whereas the one who does not veer gains peer- group esteem. Or course, t neither veers, both die of s toward each other on a single-lane road. The first Gan 120 of course, if neither veers, both die iote resulting crash. Payoftis to the Chicken game are provided in the following table. 8.6 The fol Teen Does Veer not veer Veer 2.213 Does not veer 3,0,0 a. Draw the extensive form. b. Find the pure-strategy Nash equilibrium or equilibria. 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 1 moving first and committing to this action by throwing away the steering wheel. What are teen 2'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. proper subgames in the extensive form for the sequential version of the game. Use backward induction to solve for the subgame-perfect equilibrium. Explain why the other Nash equilibria of the sequential game are "unreasona 8.4 Two neighboring homeowners, i 1, 2, simultaneously choose how many hours I, to spend maintaining a beautiful lawn. average benefit per hour is 10-

8.3

Answer 1