Excerpts from Wikipedia:
"(Lloyd) Olsen failed to completely decapitate the ... bird named Mike... leaving one ear and most of the brain stem intact... Mike began a career of touring sideshows ... Olsen's success resulted in a wave of copycat chicken beheadings... A pickled chicken head was also on display... but this was not Mike's original head... at a motel in Phoenix ... Mike (died)... Lloyd Olsen claimed that he had sold the bird off, resulting in stories of Mike still touring the country as late as 1949.
Post mortem, it was determined that the axe blade had missed the carotid artery and a clot had prevented Mike from bleeding to death. Although most of his head was severed, most of his brain stem and one ear was left on his body. Since basic functions (breathing, heart-rate, etc) as well as most of a chicken's reflex actions are controlled by the brain stem, Mike was able to remain quite healthy..."
In other words, the bird wasn't completely beheaded, Lloyd Olsen was a dishonest carny, and lots of other chickens were tortured in hopes of similar profits.
:|