Economic and Game Theory
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>>Let me rephrase my question. What are two players that yield cooperating about?
The matrix can be seen as:
>My comments were about the typical chicken game (Fudenberg and Levine's book, pp. 237, which uses the game presented in Kalai and Lehrer "Rational Learning leads to Nash equilibrium" Econometrica 1993) with payoffs:
In this case the minimax payoff is 1/3 (higher than 0). Your comments are OK given your example. So the conclusion is that you have to be careful with the game you are using.
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?
I still don't get this point. The only NE in mixed strategies is (1/2,1/2) in your game (with expected payoff 2). Yield-Yield is reached with probability 1/4.
Another comment, IN YOUR GAME Yield-Yield is a subgame perfect equilibrium outcome in a repeated game (Folk Theorem). This can be reached with, for example, a grimm strategy (you don't need to use mixed strategies). This does not happen in the game I worte down.