The Emergence of Conventions- The Crossroads Game
From Dickinson College Wiki
Game theory can explain the emergence of road rules, as the outcome of two drivers passing each other depends on their spontaneous actions and not on a pre-designed system of rules.
Consider the following example. Suppose that you, Driver 1 (D 1) are approaching an intersection. Another car driving in the opposite direction by Driver 2 (D 2) gets at the intersection at the same time.
Since you both have to cross the intersection, you as D1 have two options: you can either slow down and let the other car pass or you can maintain speed.
Suppose D 1 has an expectation of ? that D 2 will slow down and an expectation of 1 - ? that D 2 will maintain speed.
Suppose D 2 has an expectation of
