05 Jun Game Theory Practice Questions
Question
Game Theory Practice Questions
Question 1
YOU
Veer
Veer
0,0
-2 , 5
Drive
ME
Drive
5 , -2
-200 , -200
The payoff matrix above represents the game of chicken. You and I are driving
towards each other at high speed, trying to make each other veer out of the way. If we
both veer, then nothing in particular happens (say we each get 0 utility from this
outcome). If only one of us veers, though, he/she suffers a loss of utility of 2
(humiliation), whereas the other gains 5 units of utility. If neither of us veers, we have
a nasty accident and each lose 200.
Find any Nash equilibria of the above game.
Procedure:
Finding the Nash equilibria of simple games like this is straightforward.
1.
Pretend you are one player (for example "ME").
2.
Suppose that you believe your opponent is playing Veer. Find your best
response to "Veer". In this example, your best response is to play "Drive",
because 5 > 0.
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