Question 1

In games, rules:

Accepted Answer

A) define the actions that are allowed. 
B) need to be loosely adhered to in order to predict an outcome. 
C) define the winners. 
D) outline the wrong choices that could be made. 
A) define the actions that are allowed. 
B) need to be loosely adhered to in order to predict an outcome. 
C) define the winners. 
D) outline the wrong choices that could be made.

Question 2

By committing to reduce one's options during a sequential game, a player can force a change in an opponents' strategy, resulting in a:

Accepted Answer

A) payoff equal to the one that could have been reached without a commitment strategy. 
B) cooperative equilibrium that would provide maximum payoffs to all players. 
C) payoff that would have been out of reach without a commitment strategy. 
D) negative-negative outcome that would provide minimal payoffs to all players. 
A) payoff equal to the one that could have been reached without a commitment strategy. 
B) cooperative equilibrium that would provide maximum payoffs to all players. 
C) payoff that would have been out of reach without a commitment strategy. 
D) negative-negative outcome that would provide minimal payoffs to all players.

Question 3

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.This figure uses a _______ to portray the decisions of Starbucks and Dunkin' Donuts.

Accepted Answer

A) decision tree 
B) decision matrix 
C) flowchart 
D) graph 
A) decision tree 
B) decision matrix 
C) flowchart 
D) graph

Question 4

All games involve which of the following?

Accepted Answer

A) Rules 
B) Chance events 
C) Dice 
D) Cards 
A) Rules 
B) Chance events 
C) Dice 
D) Cards

Question 5

When your outcomes depend on another's choices, asking yourself _______ is the key to good decision making.

Accepted Answer

A) how others will respond 
B) what the wants and constraints of those involved are 
C) what the trade-offs are 
D) why everyone isn't already doing it 
A) how others will respond 
B) what the wants and constraints of those involved are 
C) what the trade-offs are 
D) why everyone isn't already doing it

Question 6

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?

Accepted Answer

A) Firm 1 and Firm 2 will both invest. 
B) Firm 1 will invest and Firm 2 will not invest. 
C) Firm 1 will not invest and Firm 2 will invest. 
D) Neither Firm 1 nor Firm 2 will invest. 
A) Firm 1 and Firm 2 will both invest. 
B) Firm 1 will invest and Firm 2 will not invest. 
C) Firm 1 will not invest and Firm 2 will invest. 
D) Neither Firm 1 nor Firm 2 will invest.

Question 7

According to the figure shown, Nike:

Accepted Answer

A) has a dominant strategy to charge a high price. 
B) does not have a dominant strategy. 
C) will reach an optimum outcome by acting in its own self-interest. 
D) has a dominant strategy to charge a low price. 
A) has a dominant strategy to charge a high price. 
B) does not have a dominant strategy. 
C) will reach an optimum outcome by acting in its own self-interest. 
D) has a dominant strategy to charge a low price.

Question 8

All games involve which of the following?

Accepted Answer

A) A predictable outcome 
B) Payoffs 
C) Full information 
D) A game master 
A) A predictable outcome 
B) Payoffs 
C) Full information 
D) A game master

Question 9

Which of the following statements about games is true?

Accepted Answer

A) There is always only one possible outcome. 
B) Noncooperative equilibriums are always negative-negative outcomes. 
C) There may be several stable outcomes. 
D) A dominant strategy must be present to reach a stable equilibrium. 
A) There is always only one possible outcome. 
B) Noncooperative equilibriums are always negative-negative outcomes. 
C) There may be several stable outcomes. 
D) A dominant strategy must be present to reach a stable equilibrium.

Question 10

If a player defects in a repeated game and an opponent is following a tit-for-tat strategy, we can predict the opponent will:

Accepted Answer

A) defect in the next round. 
B) renegotiate. 
C) cooperate and convince the opponent to follow. 
D) collude. 
A) defect in the next round. 
B) renegotiate. 
C) cooperate and convince the opponent to follow. 
D) collude.

Question 11

The first-mover advantage is:

Accepted Answer

A) most advantageous in a prisoner's dilemma-type game. 
B) very important in one-round sequential games. 
C) likely to lead to a positive-positive outcome. 
D) None of these statements are true. 
A) most advantageous in a prisoner's dilemma-type game. 
B) very important in one-round sequential games. 
C) likely to lead to a positive-positive outcome. 
D) None of these statements are true.

Question 12

A commitment strategy can:

Accepted Answer

A) be used to change players' payoffs to encourage cooperation. 
B) allow players to reach a mutually beneficial equilibrium that would otherwise be difficult to maintain. 
C) result in a positive-positive outcome. 
D) All of these statements are true. 
A) be used to change players' payoffs to encourage cooperation. 
B) allow players to reach a mutually beneficial equilibrium that would otherwise be difficult to maintain. 
C) result in a positive-positive outcome. 
D) All of these statements are true.

Question 13

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 these players act in their own self-interest, then Dunkin' Donuts will earn:

Accepted Answer

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

Question 14

According to the figure shown, if adidas commits to charging a low price, then Nike should:

Accepted Answer

A) charge a high price. 
B) leave the market. 
C) charge a low price. 
D) give an ultimatum. 
A) charge a high price. 
B) leave the market. 
C) charge a low price. 
D) give an ultimatum.

Question 15

Which of the following describes an ultimatum game?

Accepted Answer

A) One player makes an offer and the other player can choose to either accept or reject. 
B) One player makes an offer and the other player can choose whether to accept or make a counteroffer. 
C) Both players make offers in a repeated sequential game. 
D) A moderator makes an offer to each player, after which they can choose to play the game or not. 
A) One player makes an offer and the other player can choose to either accept or reject. 
B) One player makes an offer and the other player can choose whether to accept or make a counteroffer. 
C) Both players make offers in a repeated sequential game. 
D) A moderator makes an offer to each player, after which they can choose to play the game or not.

Question 16

Backward induction is a useful tool for:

Accepted Answer

A) finding an optimal strategy in a sequential game. 
B) analyzing decisions in a prisoners' dilemma-type game. 
C) finding an optimal strategy in a simultaneous game. 
D) Backward induction is not useful in any of these situations. 
A) finding an optimal strategy in a sequential game. 
B) analyzing decisions in a prisoners' dilemma-type game. 
C) finding an optimal strategy in a simultaneous game. 
D) Backward induction is not useful in any of these situations.

Question 17

What is the Nash Equilibrium of the game in the figure shown?

Accepted Answer

A) Firm 1 and Firm 2 invest. 
B) Firm 1 invests and Firm 2 does not invest. 
C) Firm 1 does not invest and Firm 2 invests. 
D) Firm 1 and Firm 2 do not invest. 
A) Firm 1 and Firm 2 invest. 
B) Firm 1 invests and Firm 2 does not invest. 
C) Firm 1 does not invest and Firm 2 invests. 
D) Firm 1 and Firm 2 do not invest.

Question 18

What is the Nash Equilibrium of the game in the figure shown?

Accepted Answer

A) LG advertises and Samsung does not advertise. 
B) Samsung advertises and LG does not advertise. 
C) Both LG and Samsung advertise. 
D) Neither LG nor Samsung advertises. 
A) LG advertises and Samsung does not advertise. 
B) Samsung advertises and LG does not advertise. 
C) Both LG and Samsung advertise. 
D) Neither LG nor Samsung advertises.

Question 19

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.What outcome can we predict for this game?

Accepted Answer

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

Question 20

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.The game in the figure is a version of:

Accepted Answer

A) a sequential game. 
B) a one-time game. 
C) a cooperative game. 
D) an ultimatum. 
A) a sequential game. 
B) a one-time game. 
C) a cooperative game. 
D) an ultimatum.

In games, rules:

By committing to reduce one's options during a sequential game, a player can force a change in an opponents' strategy, resulting in a:

All games involve which of the following?

When your outcomes depend on another's choices, asking yourself _______ is the key to good decision making.

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?

According to the figure shown, Nike:

All games involve which of the following?

Which of the following statements about games is true?

If a player defects in a repeated game and an opponent is following a tit-for-tat strategy, we can predict the opponent will:

The first-mover advantage is:

A commitment strategy can:

According to the figure shown, if adidas commits to charging a low price, then Nike should:

Which of the following describes an ultimatum game?

Backward induction is a useful tool for:

What is the Nash Equilibrium of the game in the figure shown?

What is the Nash Equilibrium of the game in the figure shown?

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

Exam 9: Game Theory and Strategic Thinking

In games, rules:

By committing to reduce one's options during a sequential game, a player can force a change in an opponents' strategy, resulting in a:

All games involve which of the following?

When your outcomes depend on another's choices, asking yourself _______ is the key to good decision making.

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?

According to the figure shown, Nike:

All games involve which of the following?

Which of the following statements about games is true?

If a player defects in a repeated game and an opponent is following a tit-for-tat strategy, we can predict the opponent will:

The first-mover advantage is:

A commitment strategy can:

According to the figure shown, if adidas commits to charging a low price, then Nike should:

Which of the following describes an ultimatum game?

Backward induction is a useful tool for:

What is the Nash Equilibrium of the game in the figure shown?

What is the Nash Equilibrium of the game in the figure shown?

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