Question 1

A company that wants to subtly reassure its competitors that it is committed to a tit-for-tat strategy might:

Accepted Answer

A) set its prices below cost. 
B) offer price-matching guarantees. 
C) attempt to collude. 
D) offer a commitment strategy. 
A) set its prices below cost. 
B) offer price-matching guarantees. 
C) attempt to collude. 
D) offer a commitment strategy.

Question 2

A decision tree helps a player identify:

Accepted Answer

A) optimal strategy in a simultaneous game. 
B) dominant strategies in a prisoners' dilemma-type game. 
C) optimal strategy in a sequential game. 
D) and define a binding commitment strategy. 
A) optimal strategy in a simultaneous game. 
B) dominant strategies in a prisoners' dilemma-type game. 
C) optimal strategy in a sequential game. 
D) and define a binding commitment strategy.

Question 3

The figure shown represents a simultaneous-move game between two classmates working on a project together. Each person must decide whether to work hard on the project or to slack off.   Which of the following statements is true?

Accepted Answer

A) Neither player has a dominant strategy. 
B) This game is a prisoners' dilemma. 
C) Only one player has a dominant strategy. 
D) The Nash Equilibrium in this game is for both Tia and Emma to work hard. 
A) Neither player has a dominant strategy. 
B) This game is a prisoners' dilemma. 
C) Only one player has a dominant strategy. 
D) The Nash Equilibrium in this game is for both Tia and Emma to work hard.

Question 4

In the real world, wage negotiations may avoid numerous rounds of offers and counteroffers:

Accepted Answer

A) because the company can simply offer the split that would eventually occur if the two sides played all the rounds. 
B) because neither a company nor employees can afford to not work for that long. 
C) unless the employees play an ultimatum game using a union to negotiate. 
D) None of these statements are true. 
A) because the company can simply offer the split that would eventually occur if the two sides played all the rounds. 
B) because neither a company nor employees can afford to not work for that long. 
C) unless the employees play an ultimatum game using a union to negotiate. 
D) None of these statements are true.

Question 5

A Nash equilibrium:

Accepted Answer

A) is reached when all players choose the best strategy they can, given the choices of all other players. 
B) occurs when no player has an incentive to change strategy, given other players' decisions. 
C) is considered to be a stable outcome of a game. 
D) All of these statements are true. 
A) is reached when all players choose the best strategy they can, given the choices of all other players. 
B) occurs when no player has an incentive to change strategy, given other players' decisions. 
C) is considered to be a stable outcome of a game. 
D) All of these statements are true.

Question 6

Economic games can be used to analyze decisions regarding which of the following areas of concern?

Accepted Answer

A) War 
B) Business 
C) Environmental protection 
D) All of these can be analyzed using economic games. 
A) War 
B) Business 
C) Environmental protection 
D) All of these can be analyzed using economic games.

Question 7

The process of analyzing a problem in reverse-starting with the last choice, then moving to the second-to-last choice, and so on to determine the optimal strategy-is called:

Accepted Answer

A) backward induction. 
B) reverse collusion. 
C) dominant strategizing. 
D) credible deterrence. 
A) backward induction. 
B) reverse collusion. 
C) dominant strategizing. 
D) credible deterrence.

Question 8

Two players who are both playing tit-for-tat can quickly find their way toward:

Accepted Answer

A) lasting cooperation. 
B) noncooperative outcomes for the remaining rounds. 
C) a cycle of cooperation and noncooperation, similar to a business cycle. 
D) None of these statements are true. 
A) lasting cooperation. 
B) noncooperative outcomes for the remaining rounds. 
C) a cycle of cooperation and noncooperation, similar to a business cycle. 
D) None of these statements are true.

Question 9

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, if MiiTunes charges low prices, The Rock Shop:

Accepted Answer

A) will enter the market and will earn $4 million. 
B) will enter the market and will lose $2 million. 
C) will not enter the market and will earn $0. 
D) There is not enough information to determine what The Rock Shop will do. 
A) will enter the market and will earn $4 million. 
B) will enter the market and will lose $2 million. 
C) will not enter the market and will earn $0. 
D) There is not enough information to determine what The Rock Shop will do.

Question 10

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 Joe and Sarah act in their own self-interest, what utility will Sarah receive?

Accepted Answer

A) 6 
B) 10 
C) 7 
D) 15 
A) 6 
B) 10 
C) 7 
D) 15

Question 11

In a commitment strategy, players agree to:

Accepted Answer

A) submit to a penalty in the future if they defect from a given strategy. 
B) cooperate before the game begins. 
C) cooperate in repeated games until someone defects. 
D) None of these describe a commitment strategy. 
A) submit to a penalty in the future if they defect from a given strategy. 
B) cooperate before the game begins. 
C) cooperate in repeated games until someone defects. 
D) None of these describe a commitment strategy.

Question 12

Which of the following is an example of a payoff in a game?

Accepted Answer

A) A salary 
B) Winning an election 
C) Having clean drinking water 
D) All of these are examples of payoffs. 
A) A salary 
B) Winning an election 
C) Having clean drinking water 
D) All of these are examples of payoffs.

Question 13

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.If MiiTunes and The Rock Shop are faced with the choices in the figure shown, what outcome can we predict?

Accepted Answer

A) MiiTunes will charge low prices and The Rock Shop will enter the market. 
B) MiiTunes will charge high prices and The Rock Shop will enter the market 
C) MiiTunes will charge high prices and The Rock Shop will not enter the market. 
D) MiiTunes will charge low prices and The Rock Shop will enter the market.. 
A) MiiTunes will charge low prices and The Rock Shop will enter the market. 
B) MiiTunes will charge high prices and The Rock Shop will enter the market 
C) MiiTunes will charge high prices and The Rock Shop will not enter the market. 
D) MiiTunes will charge low prices and The Rock Shop will enter the market..

Question 14

Repeated play can change the outcome in sequential games by:

Accepted Answer

A) reducing the first-mover advantage. 
B) removing the incentive to cooperate. 
C) making collusion more probable. 
D) increasing the incentive to defect. 
A) reducing the first-mover advantage. 
B) removing the incentive to cooperate. 
C) making collusion more probable. 
D) increasing the incentive to defect.

Question 15

The famous historical example of Cortés burning his boats when fighting the Aztecs is an example of:

Accepted Answer

A) a commitment device. 
B) tit-for-tit strategy. 
C) the first-mover advantage. 
D) a prisoners' dilemma. 
A) a commitment device. 
B) tit-for-tit strategy. 
C) the first-mover advantage. 
D) a prisoners' dilemma.

A company that wants to subtly reassure its competitors that it is committed to a tit-for-tat strategy might:

A decision tree helps a player identify:

The figure shown represents a simultaneous-move game between two classmates working on a project together. Each person must decide whether to work hard on the project or to slack off. Which of the following statements is true?

In the real world, wage negotiations may avoid numerous rounds of offers and counteroffers:

A Nash equilibrium:

Economic games can be used to analyze decisions regarding which of the following areas of concern?

The process of analyzing a problem in reverse-starting with the last choice, then moving to the second-to-last choice, and so on to determine the optimal strategy-is called:

Two players who are both playing tit-for-tat can quickly find their way toward:

In a commitment strategy, players agree to:

Which of the following is an example of a payoff in a game?

Repeated play can change the outcome in sequential games by:

The famous historical example of Cortés burning his boats when fighting the Aztecs is an example of:

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

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Exam 9: Game Theory and Strategic Thinking

A company that wants to subtly reassure its competitors that it is committed to a tit-for-tat strategy might:

A decision tree helps a player identify:

The figure shown represents a simultaneous-move game between two classmates working on a project together. Each person must decide whether to work hard on the project or to slack off. Which of the following statements is true?

In the real world, wage negotiations may avoid numerous rounds of offers and counteroffers:

A Nash equilibrium:

Economic games can be used to analyze decisions regarding which of the following areas of concern?

The process of analyzing a problem in reverse-starting with the last choice, then moving to the second-to-last choice, and so on to determine the optimal strategy-is called:

Two players who are both playing tit-for-tat can quickly find their way toward:

In a commitment strategy, players agree to:

Which of the following is an example of a payoff in a game?

Repeated play can change the outcome in sequential games by:

The famous historical example of Cortés burning his boats when fighting the Aztecs is an example of:

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