Question 1

A noncooperative equilibrium is one in which:

Accepted Answer

A) the participants act independently, pursuing only their individual interests. 
B) a negative-negative outcome always results. 
C) a dominant strategy exists for both players. 
D) each player ignores the actions of the other players. 
A) the participants act independently, pursuing only their individual interests. 
B) a negative-negative outcome always results. 
C) a dominant strategy exists for both players. 
D) each player ignores the actions of the other players. A

Question 2

If Nike and adidas are faced with the game in the figure shown, we can predict:

Accepted Answer

A) an outcome that is good for society but less than ideal for these companies. 
B) an outcome that is less than ideal for society, but optimal for these companies. 
C) that both companies will choose their dominant strategies, and society will lose. 
D) None of these is likely to happen. 
A) an outcome that is good for society but less than ideal for these companies. 
B) an outcome that is less than ideal for society, but optimal for these companies. 
C) that both companies will choose their dominant strategies, and society will lose. 
D) None of these is likely to happen. A

Question 3

The figure shown displays the choices that could be made by Verizon and a new firm in the industry. The payoffs are the profits (in millions)these companies will earn as a result of their choices.If the new firm expands, then Verizon should:

Accepted Answer

A) advertise. 
B) not advertise. 
C) advertise only if the new firm can impose a commitment device. 
D) None of these statements are true. 
A) advertise. 
B) not advertise. 
C) advertise only if the new firm can impose a commitment device. 
D) None of these statements are true. A

Question 4

The figure shown displays the choices that could be made by two coffee shops: Starbucks and Dunkin' Donuts. Both companies are trying to decide whether or not to expand into a new area. The area can only handle one coffee shop's expansion, and the expansion of one shop will cause the other to lose some business. If both coffee shops expand, the market will become saturated and neither will do well. The payoffs for these shops are the additional profits (or losses)they will earn.What profits can we predict Starbucks will earn given the outcome of this game?

Accepted Answer

A) $2 million 
B) −$1 million 
C) $0 million 
D) -$2 million 
A) $2 million 
B) −$1 million 
C) $0 million 
D) -$2 million

Question 5

The prisoner's dilemma can be summarized in a:

Accepted Answer

A) strategy matrix. 
B) strategy tree. 
C) decision matrix. 
D) flowchart. 
A) strategy matrix. 
B) strategy tree. 
C) decision matrix. 
D) flowchart.

Question 6

The figure shown represents the payoffs involved when Sarah and Joe work on a school project together for a single grade. They both will enjoy a higher grade when more effort is put into the project, but they also get pleasure from goofing off and not working on the project. The payoffs can be thought of as the utility each would get from the effort they individually put forth and the grade they jointly receive.According to the figure, if Joe puts forth high effort, then Sarah should:

Accepted Answer

A) put forth high effort. 
B) put forth low effort. 
C) refrain from making a decision. 
D) convince Joe to put forth low effort. 
A) put forth high effort. 
B) put forth low effort. 
C) refrain from making a decision. 
D) convince Joe to put forth low effort.

Question 7

The figure shown displays the choices that could be made by two coffee shops: Starbucks and Dunkin' Donuts. Both companies are trying to decide whether or not to expand into a new area. The area can only handle one coffee shop's expansion, and the expansion of one shop will cause the other to lose some business. If both coffee shops expand, the market will become saturated and neither will do well. The payoffs for these shops are the additional profits (or losses)they will earn.What will be the outcome of this game?

Accepted Answer

A) Starbucks will expand and Dunkin' Donuts will not expand. 
B) Starbucks will not expand and Dunkin' Donuts will expand. 
C) Starbucks and Dunkin' Donuts will both expand. 
D) Neither Starbucks nor Dunkin' Donuts will expand. 
A) Starbucks will expand and Dunkin' Donuts will not expand. 
B) Starbucks will not expand and Dunkin' Donuts will expand. 
C) Starbucks and Dunkin' Donuts will both expand. 
D) Neither Starbucks nor Dunkin' Donuts will expand.

Question 8

The figure shown displays the choices that could be made by two coffee shops: Starbucks and Dunkin' Donuts. Both companies are trying to decide whether or not to expand into a new area. The area can only handle one coffee shop's expansion, and the expansion of one shop will cause the other to lose some business. If both coffee shops expand, the market will become saturated and neither will do well. The payoffs for these shops are the additional profits (or losses)they will earn.If Starbucks expands into the new area, then Dunkin' Donuts should:

Accepted Answer

A) also expand. 
B) not expand. 
C) attempt to cooperate. 
D) convince Starbucks not to expand. 
A) also expand. 
B) not expand. 
C) attempt to cooperate. 
D) convince Starbucks not to expand.

Question 9

The figure shown represents the payoffs involved when Sarah and Joe work on a school project together for a single grade. They both will enjoy a higher grade when more effort is put into the project, but they also get pleasure from goofing off and not working on the project. The payoffs can be thought of as the utility each would get from the effort they individually put forth and the grade they jointly receive.If Sarah and Joe are faced with the choices outlined in the figure, what outcome could we predict?

Accepted Answer

A) Both Joe and Sarah will put forth low effort. 
B) Joe will put forth high effort and Sarah will put forth low effort. 
C) Joe will put forth low effort and Sarah will put forth high effort. 
D) Both Joe and Sarah will put forth high effort. 
A) Both Joe and Sarah will put forth low effort. 
B) Joe will put forth high effort and Sarah will put forth low effort. 
C) Joe will put forth low effort and Sarah will put forth high effort. 
D) Both Joe and Sarah will put forth high effort.

Question 10

Games with a noncooperative equilibrium:

Accepted Answer

A) always result in a negative-negative outcome. 
B) always result in a positive-positive outcome. 
C) can result in either a positive-positive or negative-negative outcome. 
D) always result in a positive-negative outcome (zero-sum). 
A) always result in a negative-negative outcome. 
B) always result in a positive-positive outcome. 
C) can result in either a positive-positive or negative-negative outcome. 
D) always result in a positive-negative outcome (zero-sum).

Question 11

Once a Nash equilibrium has been reached in a one-time game:

Accepted Answer

A) a stable outcome is impossible. 
B) players have no incentive to change their choices. 
C) players have an incentive to change their choices. 
D) no player can be made better off. 
A) a stable outcome is impossible. 
B) players have no incentive to change their choices. 
C) players have an incentive to change their choices. 
D) no player can be made better off.

Question 12

In real life, people's behavior is constrained by the:

Accepted Answer

A) laws of nature. 
B) legislated rules of society. 
C) costs of various actions. 
D) All of these are rules that constrain people's behavior. 
A) laws of nature. 
B) legislated rules of society. 
C) costs of various actions. 
D) All of these are rules that constrain people's behavior.

Question 13

The prisoner's dilemma is a:

Accepted Answer

A) zero sum game. 
B) game of chance. 
C) game with no dominant strategies. 
D) game with a stable equilibrium. 
A) zero sum game. 
B) game of chance. 
C) game with no dominant strategies. 
D) game with a stable equilibrium.

Question 14

What can be said about the outcome of a game that has reached a Nash equilibrium?

Accepted Answer

A) There is a stable outcome. 
B) There is no stable outcome. 
C) A positive-positive outcome can never be reached. 
D) Each player has achieved the highest payoff possible for this particular outcome. 
A) There is a stable outcome. 
B) There is no stable outcome. 
C) A positive-positive outcome can never be reached. 
D) Each player has achieved the highest payoff possible for this particular outcome.

Question 15

In a game in which a player's outcome depends on another player's choices, behaving rationally involves:

Accepted Answer

A) behaving strategically. 
B) ignoring the behavior of other actors. 
C) acting in a way to help others. 
D) All of these statements are true. 
A) behaving strategically. 
B) ignoring the behavior of other actors. 
C) acting in a way to help others. 
D) All of these statements are true.

Question 16

The figure shown represents the payoffs involved when Sarah and Joe work on a school project together for a single grade. They both will enjoy a higher grade when more effort is put into the project, but they also get pleasure from goofing off and not working on the project. The payoffs can be thought of as the utility each would get from the effort they individually put forth and the grade they jointly receive.According to the figure, Sarah:

Accepted Answer

A) should put forth low effort, regardless of what Joe chooses to do. 
B) should put forth high effort, regardless of what Joe chooses to do. 
C) does not have a dominant strategy. 
D) should use the first-mover advantage and put forth low effort. 
A) should put forth low effort, regardless of what Joe chooses to do. 
B) should put forth high effort, regardless of what Joe chooses to do. 
C) does not have a dominant strategy. 
D) should use the first-mover advantage and put forth low effort.

Question 17

Which of the following is an example of a real-life rule that might constrain people's behavior?

Accepted Answer

A) Minimum wage legislation 
B) Having 24 hours in a day 
C) The earth's limited supply of oil 
D) All of these are examples of real-life rules. 
A) Minimum wage legislation 
B) Having 24 hours in a day 
C) The earth's limited supply of oil 
D) All of these are examples of real-life rules.

Question 18

Which of the following statements about outcomes in repeated games is true?

Accepted Answer

A) A noncooperative outcome is more likely to occur in a repeated game than in a one-time game. 
B) Cooperative outcomes never occur in repeated games. 
C) A cooperative outcome is more likely to occur in a repeated game than in a one-time game. 
D) Players always cooperate and enjoy a mutually beneficial equilibrium. 
A) A noncooperative outcome is more likely to occur in a repeated game than in a one-time game. 
B) Cooperative outcomes never occur in repeated games. 
C) A cooperative outcome is more likely to occur in a repeated game than in a one-time game. 
D) Players always cooperate and enjoy a mutually beneficial equilibrium.

Question 19

The figure shown displays the choices that could be made by two firms in an industry: Tesla and Ford. The payoffs are the profits (in millions)these companies will earn as a result of their choices.What will be the outcome of this game?

Accepted Answer

A) Tesla and Ford will both invest. 
B) Tesla will invest and Ford will not invest. 
C) Tesla will not invest and Ford will invest. 
D) Neither Tesla nor Ford will invest. 
A) Tesla and Ford will both invest. 
B) Tesla will invest and Ford will not invest. 
C) Tesla will not invest and Ford will invest. 
D) Neither Tesla nor Ford will invest.

Question 20

If there is no single strategy in a game that is best regardless of other players' behavior:

Accepted Answer

A) there is no dominant strategy. 
B) the dominant strategy will be to defect. 
C) a noncooperative equilibrium is the only possible outcome. 
D) the game is a prisoners' dilemma. 
A) there is no dominant strategy. 
B) the dominant strategy will be to defect. 
C) a noncooperative equilibrium is the only possible outcome. 
D) the game is a prisoners' dilemma.

A noncooperative equilibrium is one in which:

If Nike and adidas are faced with the game in the figure shown, we can predict:

The figure shown displays the choices that could be made by Verizon and a new firm in the industry. The payoffs are the profits (in millions)these companies will earn as a result of their choices.If the new firm expands, then Verizon should:

The prisoner's dilemma can be summarized in a:

Games with a noncooperative equilibrium:

Once a Nash equilibrium has been reached in a one-time game:

In real life, people's behavior is constrained by the:

The prisoner's dilemma is a:

What can be said about the outcome of a game that has reached a Nash equilibrium?

In a game in which a player's outcome depends on another player's choices, behaving rationally involves:

Which of the following is an example of a real-life rule that might constrain people's behavior?

Which of the following statements about outcomes in repeated games is true?

The figure shown displays the choices that could be made by two firms in an industry: Tesla and Ford. The payoffs are the profits (in millions)these companies will earn as a result of their choices.What will be the outcome of this game?

If there is no single strategy in a game that is best regardless of other players' behavior:

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Exam 9: Game Theory and Strategic Thinking

A noncooperative equilibrium is one in which:

If Nike and adidas are faced with the game in the figure shown, we can predict:

The figure shown displays the choices that could be made by Verizon and a new firm in the industry. The payoffs are the profits (in millions)these companies will earn as a result of their choices.If the new firm expands, then Verizon should:

The prisoner's dilemma can be summarized in a:

Games with a noncooperative equilibrium:

Once a Nash equilibrium has been reached in a one-time game:

In real life, people's behavior is constrained by the:

The prisoner's dilemma is a:

What can be said about the outcome of a game that has reached a Nash equilibrium?

In a game in which a player's outcome depends on another player's choices, behaving rationally involves:

Which of the following is an example of a real-life rule that might constrain people's behavior?

Which of the following statements about outcomes in repeated games is true?

The figure shown displays the choices that could be made by two firms in an industry: Tesla and Ford. The payoffs are the profits (in millions)these companies will earn as a result of their choices.What will be the outcome of this game?

If there is no single strategy in a game that is best regardless of other players' behavior:

Economics and Life

Specialization and Exchange

Markets

Elasticity

Efficiency

Government Intervention

Consumer Behavior

Behavioral Economics: a Closer Look at Decision Making

Information

Time and Uncertainty

The Costs of Production

Perfect Competition

Monopoly

Monopolistic Competition and Oligopoly

The Facts of Production

International Trade

Externalities

Public Goods and Common Resources

Taxation and the Public Budget

Poverty, Inequality, and Discrimination

Political Choices

Public Policy and Choice Architecture

Filters