Consider the following variant of chicken, in which James’s payoff from being “tough” when Dean is “chicken” is 2, rather than 1:
(a) Find the mixed-strategy equilibrium in this game, including the expected payoffs for the players.
(b) Compare the results with those of the original game in Section 4.B of this chapter. Is Dean’s probability of playing Straight (being tough) higher now than before? What about James’s probability of playing Straight?
(c) What has happened to the two players’ expected payoffs? Are these differences in the equilibrium outcomes paradoxical in light of the new payoff structure? Explain how your findings can be understood in light of the opponent’s indifference principle.
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