Question:

EXAMPLE 4.2.3 {Chicken}. Two drivers speed head-on toward each other and a collision is bound to occur unless one of then:- chickeos out and swerves at the last minute. If both swerve, everything is OK [in this case, they both get a payoff of 1}. If one chickens out and sweryes~ but the other does not. then it is a great success for the player with iron oer-es [yielding a payoEof 2} and a great disgrace for the chicken {a penalty of 1}. If both players have iron nerves~ disaster strikes [and both incur a large penalty M}. player II There are two pore Nash equilibria in this game, {315'} and {13,3}: if one player knows with certainty that the other will drive on [respectively1 s'Izirer'I.re]I1 that player is better off swerying [respectively1 driving on}. To determine the mixed aquilibria.' suppose that player I plays 3 with probabil- ity :r and D with probability 1 z. This presents player II with expected payoffs of :r.+{1 r]r{l}, Le, 21 1 if he plays 3, and 2s+{l r}~{M] = [M+2}rM