Two Players Are Engaged in a Game of "Chicken

question 23

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 15.43 if the other player Swerves and a payoff of -36 if the other player also chooses to Drive Straight.This game has two pure strategy equilibria and

• A)two mixed strategies in which players alternate between swerving and driving straight.
• B)a mixed strategy in which each player swerves with probability 0.35 and drives straight with probability 0.65.
• C)a mixed strategy equilibrium in which one player swerves with probability 0.70 and the other swerves with probability 0.30.
• D)a mixed strategy equilibrium in which each player swerves with probability 0.70 and drives straight with probability 0.30.
• E)no mixed strategies.

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Definitions:

Operating Activities

Transactions involved in the main business functions of an entity, including revenue and expense activities.

Indirect Method

A cash flow statement reconciliation technique that adjusts net income for non-cash transactions, deferred amounts, and accruals to calculate operating cash flow.

Accumulated Depreciation

The total amount of a tangible asset's cost that has been allocated as depreciation expense since the asset was put into use.

Statement of Cash Flows

An analysis document indicating the effects of changes in balance sheet items and earnings on cash and cash equivalents, categorized by operating, investing, and financing operations.