Business, Legal & Accounting Glossary
A chicken game is a game theory setup that typically describes two players heading toward each other. If the players continue on the same path, they bump into each other; if one swerves out of the way and the other doesn’t, the swerver “loses” and is labeled the chicken, while the second, implicitly braver player, wins.
The payoff matrix is as follows:
Swerve Continue Straight
Swerve 0, 0 -1, +1
Continue Straight +1, -1 -2, -2
(This setup implies two players are merely walking towards each other; if they were, say, driving, the Continue Straight/Continue Straight choice would constitute a much higher negative payoff. While these differences in payoffs matter for calculating mixed strategy Nash equilibrium, only order matters for regular Nash equilibrium).
The NE in this scenario are Continue Straight/Swerve and Swerve/Continue Straight.
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This glossary post was last updated: 4th August, 2021 | 8 Views.