What would be the equilibrium of the classic game “Chicken” if it was played as a...

What would be the equilibrium of the classic game “Chicken” if it was played as a Stackleberg game in which one player gets to decide first?

Expert Solution

Chicken in game theory is described with an example where 2 drivers are driving towards each other and are going to crash unless one or both decide to swerve. If both don't swerve, it results in a collision with the least payoff for each,however if one swerves and other doesn't it results in the best utility(higher than when both swerve) for the one who doesn't swerve and a lowered utility for the one who chickens out(i.e. swerves)

The equilibrium of the classic game "Chicken" if it was played as a Stackleberg game in which one player gets to decide first will be the one where the player who gets to decides first will not swerve and the responder swerves. Since in the Stackleberg equilibrium,the leader(player who decides first) already knows that the other person is observing his action thus will commit to an action that maximizes his own utility(that is not crashing) given the leaders' action.

Rahul Sunny answered 1 year ago

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