Chicken

We have all heard of the game of chicken, who would've thought that game theory was at play?! Here's the scenario: two drivers are speeding toward each other on a collision course and will probably die if they crash into one another, one of them must swerve to avoid that outcome, but by doing so he risks being seen as a coward by his peers. Essentially, both drivers want to avoid the "coward" label, but they arrive at the worst possible outcome (death) if neither swerves his car. This is different from the prisoner's dilemma because you should (theoretically) defect every time, regardless of what the other player does. It's not that simple in chicken; that is, what if both players decide to defect (not swerve)? They both die and that's the worst possible outcome. In this game, each player has a great interest in knowing what his opponent plans to do; they both want to do the opposite of what the other player does. If you know with absolute certainty that the other driver was going to drive straight, you would swerve (come on, we all would) because you would rather live to play other games than die to prove a point. The opposite is true as well; that is, if you knew the other driver was going to swerve no matter what, you would drive straight and be the hero (again, we all would). Therefore, there are two Nash equilbria in this game [see the above payoffs (1,5) and (5,1)]. This is not an ideal situation because each player is hoping the other swerves so he can drive straight. But, you cannot argue that each driver acted irrationally if neither of them swerved. Sure, they achieved the worst possible outcome, but they did not know in advance what the other driver was going to do. If you happen to swerve and the other driver goes straight, you can at least stay alive and achieve some payoff rather than no payoff whatsoever. The same holds true for your opponent, so why don't both of you take a chance and drive straight? This is an example where Nash's equilibrium theory falls short. But, if you were forced to adopt a pure strategy, you should always swerve. Not only will you be alive, but swerving has the maximum minimum payoff; that is the worst you could do is achieve a score of 1 by swerving. On the contrary, the worst you could achieve by driving straight is a score of 0.

An excellent real-world example of chicken is the Cuban Missile Crisis of October 1962. If you're reading this blog, I assume you already know what that was so I won't detail it here. Suffice it to say, the Soviet Union swerved while the United States kept driving straight. Although the Soviets lost face following the incident, they averted the worst possible outcome (war, possibly nuclear). The United States was also quite close to swerving as well. The Soviets offered a deal whereby the U.S. would dismantle its missiles in Turkey in exchange for the Soviets doing the same in Cuba (this did happen though, albeit six months later). If the U.S. accepted the quid pro quo deal, that would have constituted mutual swerving and neither side emerging "victorious."