Economic and Game Theory
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The matrix can be seen as:
In this case, the player that does not yield is able to gain 4 utils, against 1 for the chicken. Has he also yielded, cooperated,
society would have been better off by one util.
2) The 1-shot game has three NE: Yield-Insist, Insist-Yield and a NE in mixed strategies. All of the NE have positive
(expected) payoff to the players. Moreover, the minimax payoff is 1/3 (the same payoff as that of the mixed strategy NE).
I don't find a meaning to to try to justify an outcome with payoff lower than the minimax. Why should players want to
get less than the minimax payoff?
The minimax payoff, as i see it is 1 util in this matrix (is it the same that in me NE? I am not quite sure, but i am not a game theorist), so both would cooperate if playing by their secutiry level. The players do know, however, that by deviating (while the
sticks to his security level) they would get 3 more cheap utils. Moreover, ove repeated interactions they know that once you play chicken you will continue to do so for it is not in your interest to risk mutual defection. My question is: under what conditions can
we assume players are going to play according to their minmax calculation? Or else, if playing mixed strategies, what is the probability that cooperation, (the 3,3 payoff) is reached?
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