Question 1

Repetition of a game

Accepted Answer

A)  yields the same outcome, over and over. 
B)  can result in behavior that is different from what it would be if the game were played only once. 
C)  is not possible. 
D)  makes cooperative games into non-cooperative games. 
E)  is possible only if the payoffs in the matrix change. 
A)  yields the same outcome, over and over. 
B)  can result in behavior that is different from what it would be if the game were played only once. 
C)  is not possible. 
D)  makes cooperative games into non-cooperative games. 
E)  is possible only if the payoffs in the matrix change.

Question 2

Joe's Imports is currently the only dealer for imported Sporto autos on the East Coast, but Fred's Autos may enter the import market and start selling Sporto cars in the East Coast market during the coming year. Joe's Imports can pay the Sporto manufacturer for exclusive East Coast marketing rights, which would deter the entry of Fred's Autos into the market. The payoffs from the possible actions are measured in millions of dollars per year, and the possible outcomes of the sequential entry game are summarized in the following matrix:
 
What is the equilibrium outcome from this sequential entry game?

Accepted Answer

A)  Joe's Imports buys the marketing rights, and Fred's Autos cannot enter the market. 
B)  Joe's Imports buys the marketing rights, and Fred's Autos enters the market. 
C)  Joe's Imports does not buy the marketing rights, and Fred's Autos enters the market. 
D)  Joe's Imports does not buy the marketing rights, but Fred's Autos does not enter the market. 
A)  Joe's Imports buys the marketing rights, and Fred's Autos cannot enter the market. 
B)  Joe's Imports buys the marketing rights, and Fred's Autos enters the market. 
C)  Joe's Imports does not buy the marketing rights, and Fred's Autos enters the market. 
D)  Joe's Imports does not buy the marketing rights, but Fred's Autos does not enter the market.

Question 3

Scenario 13.8
Consider the following game:  
-In game in Scenario 13.8,

Accepted Answer

A)  Y is a dominant strategy for IVY Corp. 
B)  Z is a dominant strategy for IVY Corp. 
C)  A is a dominant strategy for SAC Group. 
D)  B is a dominant strategy for SAC Group. 
E)  No firm has a dominant strategy. 
A)  Y is a dominant strategy for IVY Corp. 
B)  Z is a dominant strategy for IVY Corp. 
C)  A is a dominant strategy for SAC Group. 
D)  B is a dominant strategy for SAC Group. 
E)  No firm has a dominant strategy.

Question 4

Two firms in a local market compete in the manufacture of cyberwidgets. Each firm must decide if they will offer a warranty or not. The pay-offs of each firm's strategy is a function of their competitor as well. The pay-off matrix is presented below.   
Does either player have a dominant strategy? Does the game have any Nash equilibria? What is the maximin strategy of each player in the game? Should the players use a mixed strategy?

Accepted Answer

Both players have a dominant strategy to

Question 5

If, in the game in Scenario 13.14, R moves first, it will select

Accepted Answer

A)  Q = 50. 
B)  Q = 100. 
C)  Q = 150. 
D)  a mixed strategy over the three choices that includes some positive likelihood for each Q. 
E)  a mixed strategy over the choices Q = 50 and Q = 100. 
A)  Q = 50. 
B)  Q = 100. 
C)  Q = 150. 
D)  a mixed strategy over the three choices that includes some positive likelihood for each Q. 
E)  a mixed strategy over the choices Q = 50 and Q = 100.

Question 6

Scenario 13.5
Consider the following game:  
-Which of the following is true regarding the game in Scenario 13.5?

Accepted Answer

A)  Only Bull Meat has a dominant strategy. 
B)  Only Deer Meat has a dominant strategy. 
C)  Both companies have a dominant strategy: expand West. 
D)  Both companies have a dominant strategy: expand South. 
E)  Neither company has a dominant strategy. 
A)  Only Bull Meat has a dominant strategy. 
B)  Only Deer Meat has a dominant strategy. 
C)  Both companies have a dominant strategy: expand West. 
D)  Both companies have a dominant strategy: expand South. 
E)  Neither company has a dominant strategy.

Question 7

Two firms in a local market compete in the manufacture of cyberwidgets. Each firm must decide if they will engage in product research to innovate their version of the cyberwidget. The pay-offs of each firm's strategy is a function of the strategy of their competitor as well. The pay-off matrix is presented below.   
Does either player have a dominant strategy? Does the game have any Nash equilibria? What is the maximin strategy of each player in the game?

Accepted Answer

Neither player has a dominant strategy i

Question 8

Why does cooperative behavior break down in games with finite endpoints?

Accepted Answer

A)  Each player has an incentive to deviate from a cooperative strategy during the last period. 
B)  A Nash equilibrium in pure strategies is not possible in finite repeated games. 
C)  Finite games have the same outcomes as one-period games, and cooperation is not possible in one-period games. 
D)  A Nash equilibrium is only possible in mixed strategies in finite repeated games, but all of the probabilities assigned to particular strategies approach zero as the number of finite game periods becomes large. Thus, we cannot evaluate the expected payoffs in these games. 
A)  Each player has an incentive to deviate from a cooperative strategy during the last period. 
B)  A Nash equilibrium in pure strategies is not possible in finite repeated games. 
C)  Finite games have the same outcomes as one-period games, and cooperation is not possible in one-period games. 
D)  A Nash equilibrium is only possible in mixed strategies in finite repeated games, but all of the probabilities assigned to particular strategies approach zero as the number of finite game periods becomes large. Thus, we cannot evaluate the expected payoffs in these games.

Question 9

In the game in Scenario 13.14, each firm has a strategy that would not be chosen under any circumstances. This strategy is

Accepted Answer

A)  Q = 50. 
B)  Q = 100. 
C)  Q = 150. 
D)  "choose the same Q as the other player." 
E)  "choose a Q different from the other player's." 
A)  Q = 50. 
B)  Q = 100. 
C)  Q = 150. 
D)  "choose the same Q as the other player." 
E)  "choose a Q different from the other player's."

Question 10

Scenario 13.8
Consider the following game:  
-In game in Scenario 13.8, what will occur if IVY Corp. plays a maximin strategy?

Accepted Answer

A)  $1, $10 
B)  $1, -$5000 
C)  $2, $0 
D)  $2, $2 
E)  There is a .25 chance of each outcome in that case. 
A)  $1, $10 
B)  $1, -$5000 
C)  $2, $0 
D)  $2, $2 
E)  There is a .25 chance of each outcome in that case.

Question 11

Use the following statements to answer the question:
I. Consider the problem of negotiating the price of a rug that costs $100 to make. If there are two buyers (one with a maximum willingness-to-pay of $200 and one with a maximum willingness-to-pay of $250), then the situation is no longer a constant sum game.
II. The likely outcome from the game described in statement I is that the second buyer will bid a price slightly above $200 to win the rug.

Accepted Answer

A)  I and II are true. 
B)  I is true and II is false. 
C)  II is true and I is false. 
D)  I and II are false. 
A)  I and II are true. 
B)  I is true and II is false. 
C)  II is true and I is false. 
D)  I and II are false.

Question 12

Consider the Matching Pennies game:
 
Suppose Player B always uses a mixed strategy with probability of 3/4 for head and 1/4 for tails. Which of the following strategies for Player A provides the highest expected payoff?

Accepted Answer

A)  Mixed strategy with probability 1/4 on heads and 3/4 on tails 
B)  Mixed strategy with probability 1/2 on heads and 1/2 on tails 
C)  Mixed strategy with probability 3/4 on heads and 1/4 on tails 
D)  Pure strategy in which Player A always selects heads 
A)  Mixed strategy with probability 1/4 on heads and 3/4 on tails 
B)  Mixed strategy with probability 1/2 on heads and 1/2 on tails 
C)  Mixed strategy with probability 3/4 on heads and 1/4 on tails 
D)  Pure strategy in which Player A always selects heads

Question 13

If, in the game in Scenario 13.14, R moves first, C will respond with

Accepted Answer

A)  Q = 50. 
B)  Q = 100. 
C)  Q = 150. 
D)  a mixed strategy over the three choices that includes some positive likelihood for each Q. 
E)  a mixed strategy over the choices Q = 50 and Q = 100. 
A)  Q = 50. 
B)  Q = 100. 
C)  Q = 150. 
D)  a mixed strategy over the three choices that includes some positive likelihood for each Q. 
E)  a mixed strategy over the choices Q = 50 and Q = 100.

Question 14

Scenario 13.13
Consider the game below:  
-Playing the game in Scenario 13.13 sequentially would

Accepted Answer

A)  not change the equilibrium. 
B)  change the equilibrium to (R1,C1). 
C)  change the equilibrium to (R2,C1) if R moved first. 
D)  change the equilibrium to (R2,C1) if C moved first. 
E)  change the equilibrium to (R2,C2). 
A)  not change the equilibrium. 
B)  change the equilibrium to (R1,C1). 
C)  change the equilibrium to (R2,C1) if R moved first. 
D)  change the equilibrium to (R2,C1) if C moved first. 
E)  change the equilibrium to (R2,C2).

Question 15

Once the state environmental protection agency devises its new policy to protect the environment, firms decide whether to remain in the state or move their operations to a neighboring state. In the language of game theory, this is an example of:

Accepted Answer

A)  a cooperative game. 
B)  a sequential game. 
C)  a threat. 
D)  the Prisoner's dilemma. 
A)  a cooperative game. 
B)  a sequential game. 
C)  a threat. 
D)  the Prisoner's dilemma.

Question 16

Gym X and Bodyworks are both going to open an exercise facility in the local market. Each company may decide to open a facility concentrating on cardio equipment for customers interested in mostly aerobic workouts. Another alternative for each company is to open a facility concentrating on muscle building equipment for customers interested mostly in bodybuilding workouts. The pay-off matrix for each company dependent upon their strategies and that of their competitor is given below.   
Does either player have a dominant strategy? Does the game have any Nash equilibria? What is the maximin strategy of each player in the game?

Accepted Answer

Neither player has a dominant strategy i

Question 17

In the game in Scenario 13.10, there is

Accepted Answer

A)  a mixed strategy equilibrium, and no other. 
B)  a mixed strategy and a pure strategy equilibrium. 
C)  a mixed strategy and two pure strategy equilibria. 
D)  a mixed strategy and four pure strategy equilibrium. 
E)  no equilibrium in either mixed or pure strategies. 
A)  a mixed strategy equilibrium, and no other. 
B)  a mixed strategy and a pure strategy equilibrium. 
C)  a mixed strategy and two pure strategy equilibria. 
D)  a mixed strategy and four pure strategy equilibrium. 
E)  no equilibrium in either mixed or pure strategies.

Question 18

Consider the Battle of the Sexes game:
 
Suppose both players use mixed strategies for this game. Jim chooses wrestling with probability 0.9, and Joan chooses wrestling with probability 0.5. What are the expected payoffs for the players?

Accepted Answer

A)  The expected payoffs are 0.95 for Joan and 0.55 for Jim 
B)  The expected payoffs are 0.55 for Joan and 0.95 for Jim 
C)  The expected payoffs are 0.95 for both players 
D)  The expected payoffs are 0.55 for both players 
A)  The expected payoffs are 0.95 for Joan and 0.55 for Jim 
B)  The expected payoffs are 0.55 for Joan and 0.95 for Jim 
C)  The expected payoffs are 0.95 for both players 
D)  The expected payoffs are 0.55 for both players

Question 19

To deter a potential entrant, an existing firm in a market may threaten to sharply increase production so that the entrant will be left with a small share of the market. The firm can make this threat credible by limiting its own options, and possible actions of this type include:

Accepted Answer

A)  signing long-term sales contracts that commit the firm to high levels of output. 
B)  building a very large factory that could potentially produce enough output to meet most of the market demand. 
C)  signing long-term purchase contracts for large amounts of production inputs. 
D)  all of the above 
A)  signing long-term sales contracts that commit the firm to high levels of output. 
B)  building a very large factory that could potentially produce enough output to meet most of the market demand. 
C)  signing long-term purchase contracts for large amounts of production inputs. 
D)  all of the above

Question 20

If the Battle of the Sexes game were played sequentially,

Accepted Answer

A)  one of the two pure strategy equilibria would become the only equilibrium. 
B)  the two pure strategy equilibria would alternate in being the equilibrium seen in each round of the game. 
C)  only the mixed strategy equilibrium would exist. 
D)  only the dominant strategy equilibrium would exist. 
E)  the equilibrium would not change. 
A)  one of the two pure strategy equilibria would become the only equilibrium. 
B)  the two pure strategy equilibria would alternate in being the equilibrium seen in each round of the game. 
C)  only the mixed strategy equilibrium would exist. 
D)  only the dominant strategy equilibrium would exist. 
E)  the equilibrium would not change.

Repetition of a game

Scenario 13.8 Consider the following game: -In game in Scenario 13.8,

If, in the game in Scenario 13.14, R moves first, it will select

Scenario 13.5 Consider the following game: -Which of the following is true regarding the game in Scenario 13.5?

Why does cooperative behavior break down in games with finite endpoints?

In the game in Scenario 13.14, each firm has a strategy that would not be chosen under any circumstances. This strategy is

Scenario 13.8 Consider the following game: -In game in Scenario 13.8, what will occur if IVY Corp. plays a maximin strategy?

Consider the Matching Pennies game: Suppose Player B always uses a mixed strategy with probability of 3/4 for head and 1/4 for tails. Which of the following strategies for Player A provides the highest expected payoff?

If, in the game in Scenario 13.14, R moves first, C will respond with

Scenario 13.13 Consider the game below: -Playing the game in Scenario 13.13 sequentially would

Once the state environmental protection agency devises its new policy to protect the environment, firms decide whether to remain in the state or move their operations to a neighboring state. In the language of game theory, this is an example of:

In the game in Scenario 13.10, there is

Consider the Battle of the Sexes game: Suppose both players use mixed strategies for this game. Jim chooses wrestling with probability 0.9, and Joan chooses wrestling with probability 0.5. What are the expected payoffs for the players?

To deter a potential entrant, an existing firm in a market may threaten to sharply increase production so that the entrant will be left with a small share of the market. The firm can make this threat credible by limiting its own options, and possible actions of this type include:

If the Battle of the Sexes game were played sequentially,

Preliminaries

The Basics of Supply and Demand

Consumer Behavior

Individual and Market Demand

Uncertainty and Consumer Behavior

Production

The Cost of Production

Profit Maximization and Competitive Supply

The Analysis of Competitive Markets

Market Power: Monopoly and Monopsony

Pricing With Market Power

Monopolistic Competition and Oligopoly

Markets for Factor Inputs

Investment, Time, and Capital Markets

General Equilibrium and Economic Efficiency

Markets With Asymmetric Information

Externalities and Public Goods

Filters

Exam 13: Game Theory and Competitive Strategy

Repetition of a game

Scenario 13.8 Consider the following game: -In game in Scenario 13.8,

If, in the game in Scenario 13.14, R moves first, it will select

Scenario 13.5 Consider the following game: -Which of the following is true regarding the game in Scenario 13.5?

Why does cooperative behavior break down in games with finite endpoints?

In the game in Scenario 13.14, each firm has a strategy that would not be chosen under any circumstances. This strategy is

Scenario 13.8 Consider the following game: -In game in Scenario 13.8, what will occur if IVY Corp. plays a maximin strategy?

Consider the Matching Pennies game: Suppose Player B always uses a mixed strategy with probability of 3/4 for head and 1/4 for tails. Which of the following strategies for Player A provides the highest expected payoff?

If, in the game in Scenario 13.14, R moves first, C will respond with

Scenario 13.13 Consider the game below: -Playing the game in Scenario 13.13 sequentially would

Once the state environmental protection agency devises its new policy to protect the environment, firms decide whether to remain in the state or move their operations to a neighboring state. In the language of game theory, this is an example of:

In the game in Scenario 13.10, there is

Consider the Battle of the Sexes game: Suppose both players use mixed strategies for this game. Jim chooses wrestling with probability 0.9, and Joan chooses wrestling with probability 0.5. What are the expected payoffs for the players?

To deter a potential entrant, an existing firm in a market may threaten to sharply increase production so that the entrant will be left with a small share of the market. The firm can make this threat credible by limiting its own options, and possible actions of this type include:

If the Battle of the Sexes game were played sequentially,

Preliminaries

The Basics of Supply and Demand

Consumer Behavior

Individual and Market Demand

Uncertainty and Consumer Behavior

Production

The Cost of Production

Profit Maximization and Competitive Supply

The Analysis of Competitive Markets

Market Power: Monopoly and Monopsony

Pricing With Market Power

Monopolistic Competition and Oligopoly

Markets for Factor Inputs

Investment, Time, and Capital Markets

General Equilibrium and Economic Efficiency

Markets With Asymmetric Information

Externalities and Public Goods

Filters