Midterm1 - Econ 171 Introduction to Game Theory Midterm #1...

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Midterm #1 This test contains three problems. Each part of each question is worth 10 points for a maximum of 80 points. Answer all questions (showing your work where necessary). You have 75 minutes to complete the test. Good Luck! 1. Chicken: Abe and Bob are each hoping to win the heart of Claire. In order to prove their manhood, they decide to engage in a game of Chicken. The game of Chicken is played as follows: toward each other on a collision course. At least one of the players must swerve to the side, or they will crash into each other. If neither player swerves, they crash, and the payo/s are -10 to both players. If one player swerves and the other does not, the player who swerves is embarrased and receives a payo/ of -1. The player who does not swerve receives a payo/ of 5 (4 for winning Claire±s heart, and 1 for proving his manhood to the world). If both swerve, they tie. They are both embarrased, and each has a 50-50 chance to win Claire±s heart. This implies an expected payo/ of 1 for each player. (a)
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Midterm1 - Econ 171 Introduction to Game Theory Midterm #1...

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