Question

Question 1. Put the following game into the normal form. That is, describe the set of players, the strategy sets for each player, the payoff functions, and draw the game in matrix form. What do you expect would happen in this game, and why?Two kids are playing a game of Chicken. In this game, they ride their bikes as fast as theycan at each other. The one to swerve or turn out of the way loses, he is a Chicken and will getteased by his friends, while the kid who keeps going straight wins, and gets to brag about his victory.However, if neither kid swerves, they will crash into each other, which will hurt a lot more thanbeing teased. If both kids swerve, then nobody is hurt or teased, but also nobody wins. The kidsprefer winning to losing, but prefer both winning and losing as preferable to crashing.Let each player have two options: Swerve and Straight. Let the payoff of winning be 10, the payoff of losing be -1, the payoff to neither winning orl losing be 0, and the payoff of crashing be -10

Answer 1

The set of players is - Player 1, Player 2.

The strategy set for each player is: Swerve or Don't Swerve/Straight.

The payoff for winning is 10, losing is -1, neither winning or losing is 0 and the payoff of crashing is -10, the game can be expressed in the matrix form as follows:

                                                               

		Player 2
		Swerve	Don't swerve/Straight
Player 1	Swerve	(0,0)	(-1,10)
	Don't swerve/Straight	(10,-1)	(-10,-10)

Since the kids prefer winning to losing, but prefer both winning and losing as preferable to crashing, there will be two Nash equilibrium in this game given by (Swerve, Don't Swerve) and (Don't swerve, Swerve).