Two Players Are Engaged in a Game of Chicken

question 8

Multiple Choice

Two players are engaged in a game of Chicken.There are two possible strategies, Swerve and Drive Straight.A player who chooses to Swerve is called Chicken and gets a payoff of zero, regardless of what the other player does.A player who chooses to Drive Straight gets a payoff of 432 if the other player swerves and a payoff of -48 if the other player also chooses to Drive Straight.This game has two pure strategy equilibria and

• A)a mixed strategy equilibrium in which each player swerves with probability .10 and drives straight with probability .90.
• B)a mixed strategy in which each player swerves with probability .05 and drives straight with probability .95.
• C)a mixed strategy equilibrium in which one player swerves with probability .10 and the other swerves with probability .90.
• D)two mixed strategies in which players alternate between swerving and driving straight.
• E)no mixed strategies.

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Definitions:

Endowment

The initial allocation of income, goods, or resources that individuals or firms possess in an economy, often impacting their trading capabilities and outcomes in markets.

Price

The amount of money required to purchase a good or service, reflecting its value in a market economy.

Endowment

The total resources available to an individual or entity, including income, assets, and wealth.

Consumption

The process by which goods and services are used up by consumers, reflecting a part of the economy concerned with spending on final goods and services.