Exam 9: Game Theory and Strategic Thinking

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:

Game theory is:

Behaving strategically means:

The figure shown represents the choices and payoffs (company profits)of two music shops-MiiTunes and The Rock Shop. MiiTunes is an established business in the area deciding whether to charge its usual high prices or to charge very low prices, in the hopes that a new business will not be able to compete with these prices. The Rock Shop is trying to decide whether or not it should enter the market.According to the figure, MiiTunes:

Cooperative equilibriums:

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

In the prisoners' dilemma:

The tit-for-tat strategy:

The figure shown displays the choices that could be made by two firms in an industry. 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?

In the prisoner's dilemma:

In a game of bargaining, those who _______________ will likely receive the highest payoffs.

Which of the following is an example of a strategy in economic games?Studying an extra hour in order to do better on an examSelecting your next move in a game of chessChoosing to take piano lessons instead of violin lessons

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.What will be the outcome of this game?

A dominant strategy:

The prisoners' dilemma is a game of strategy in which people:

The game in the figure shown is a version of:

Which of the following is key to gaining cooperative behavior in a repeated game?

The figure shown represents the choices and payoffs (company profits)of two music shops-MiiTunes and The Rock Shop. MiiTunes is an established business in the area deciding whether to charge its usual high prices or to charge very low prices, in the hopes that a new business will not be able to compete at these prices. The Rock Shop is trying to decide whether or not it should enter the market.According to the figure, The Rock Shop:

If the players in the figure shown act in their own self-interest, then we know that adidas will earn:

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 Dunkin' Donuts is able to use a commitment device that commits them to expansion, then Starbucks should: