Question 1

(Table: Firms A and B XII)   
a. What is the Nash equilibrium if the game is played once with simultaneous moves?
b. What is the Nash equilibrium if the game is played sequentially?

Accepted Answer

a. Both firms will expand outp

Question 2

(Table: Firms 1 and 2 II) The payoffs are profits in millions of dollars.   If Firm 1 follows a maximin strategy, the outcome of this game is:

Accepted Answer

A)  (20 , 20). 
B)  (8 , 8). 
C)  (-20 , 15). 
D)  (-1 , 10). 
A)  (20 , 20). 
B)  (8 , 8). 
C)  (-20 , 15). 
D)  (-1 , 10).

Question 3

(Table: Lemonade) Andrei and Sonya operate lemonade stands in the same neighborhood.   Payoffs are in quarters . The kids have formed an agreement to restrict output. They are playing an infinitely repeated game in which output decisions must be made every period and both of them are using tit-for-tat trigger strategies. If the discount rate is d = 0.4, then the players ____.

Accepted Answer

A)  prefer to collude rather than not to collude 
B)  prefer not to collude rather than to collude 
C)  are indifferent between colluding and not colluding 
D)  not enough information is given in the problem to determine preference for collusion. 
A)  prefer to collude rather than not to collude 
B)  prefer not to collude rather than to collude 
C)  are indifferent between colluding and not colluding 
D)  not enough information is given in the problem to determine preference for collusion.

Question 4

(Table: History Channel and Animal Planet I) Payoffs represent profits in thousands of dollars.   In this game, the Nash equilibria are:

Accepted Answer

A)  (210 , 250) and (180 , 180). 
B)  (50 , 50) and (20 , 20). 
C)  (210 , 250) and (50, 50). 
D)  (20 , 20), (50, 50), and (180 , 180). 
A)  (210 , 250) and (180 , 180). 
B)  (50 , 50) and (20 , 20). 
C)  (210 , 250) and (50, 50). 
D)  (20 , 20), (50, 50), and (180 , 180).

Question 5

The table contains letters that represent payoff values. If the strategy combination (B , Y) is a Nash equilibrium, then prove that the strategy combination (A , X) must also be a Nash equilibrium assuming there are no dominant strategies. Assume that no two letters will take on the same value.

Accepted Answer

If the strategy outcome (B , Y) is a Nas

Question 6

(Table: Firms 1 and 2 III) Payoffs represent profits in millions of dollars.   Firm 1's dominant strategy is ____.

Accepted Answer

A)  up 
B)  down 
C)  left 
D)  right 
A)  up 
B)  down 
C)  left 
D)  right

Question 7

Suppose two players use strategies that produce these payoffs:   
a. What are the pure-strategy Nash equilibria if any?
b. What is the mixed-strategy Nash equilibrium?

Accepted Answer

a. This problem challenges the student t

Question 8

Consider the following game.   The choices of ____ represent a Nash Equilibrium in this game.

Accepted Answer

A)  Strategy A, Strategy A 
B)  Strategy A, Strategy B 
C)  Strategy B, Strategy B 
D)  none of the above 
A)  Strategy A, Strategy A 
B)  Strategy A, Strategy B 
C)  Strategy B, Strategy B 
D)  none of the above

Question 9

Suppose that Galina and Vlada are playing a finitely repeated flag game. The game starts with seven flags in the ground, and the players take turns removing the flags. A player must remove either one, two, or three flags per turn. The player who takes the last flag out of the ground, whether it is by itself or in a group, wins the game. Assume that Galina decides first on how many flags to remove. How many flags should Galina remove on her first turn to guarantee that she will win the game? Use backward induction.

Accepted Answer

A)  one 
B)  two 
C)  three 
D)  either one or two 
A)  one 
B)  two 
C)  three 
D)  either one or two

Question 10

Two boxers, Brutus and Floyd, are training to fight each other. Each boxer is considering whether to take steroids to improve his chance of winning the fight. Assume that the boxing association does not have a policy against steroid use. If both boxers take steroids, neither has an advantage and the payoffs (net of health costs) are $3 million per boxer. If both boxers don't take steroids, the payoffs are $4 million per boxer. If one boxer takes steroids and the other doesn't, the boxer taking the steroids receives a payoff of $6 million (net of health costs) and the other boxer receives a $1 million payoff.
a. Represent the preceding information in a normal-form game.
b. What is the Nash equilibrium?
c. Would the boxers be better off if the boxing association banned steroids and tested each boxer for steroids prior to a fight?

Accepted Answer

a. @#IMG-DLM& 
b. Both boxers take stero

Question 11

The following game:

Accepted Answer

A)  has no mixed-strategy equilibrium. 
B)  has a mixed-strategy equilibrium in which Row plays Up with 0.5 probability and Down with 0.5 probability. 
C)  has a mixed-strategy equilibrium in which Column plays left with 0.5 probability and right with 0.5 probability. 
D)  has a mixed-strategy equilibrium in which answers B and C both hold. 
A)  has no mixed-strategy equilibrium. 
B)  has a mixed-strategy equilibrium in which Row plays Up with 0.5 probability and Down with 0.5 probability. 
C)  has a mixed-strategy equilibrium in which Column plays left with 0.5 probability and right with 0.5 probability. 
D)  has a mixed-strategy equilibrium in which answers B and C both hold.

Question 12

(Table: Firms A and B I) The payoffs represent profits measured in thousands of dollars.   In this infinitely repeated game, Firm A and Firm B are both using grim trigger strategies; they agree to charge a high price in period one. If Firm A has a change of heart and decides not to charge a high price in period one, what is Firm A's expected payoff from cheating? Assume that d = 0.9.

Accepted Answer

A)  $165,000 
B)  $150,000 
C)  $315,000 
D)  $180,000 
A)  $165,000 
B)  $150,000 
C)  $315,000 
D)  $180,000

Question 13

(Table: Players A and B VII)   In Table 1, ____ is a Nash Equilibrium.

Accepted Answer

A)  (A, 
A)  
B)  (A, 
B)  
C)  (B, 
A)  
D)  (B, 
B)  
A)  (A, 
A)  
B)  (A, 
B)  
C)  (B, 
A)  
D)  (B, 
B)

Question 14

Suppose that you are playing an infinitely repeated game. You and your opponent agree to restrict output each period to maximize discounted profit. For each period, you and your opponent have to touch a button on a computer screen that selects the level of output, namely, restricted or unrestricted output. Once the button is touched, the output is locked in for the period and cannot be changed. If your opponent has a shaky hand, would you rather use a grim trigger strategy or a tit-for-tat strategy?

Accepted Answer

The reason to use a grim trigger strateg

Question 15

Which of the following games is solvable by backward induction?
I. a 3-period simultaneous game
II. an infinitely repeated simultaneous game
III. a 1-period simultaneous game
IV. a sequential game

Accepted Answer

A)  II 
B)  IV 
C)  I and III 
D)  I and IV 
A)  II 
B)  IV 
C)  I and III 
D)  I and IV

Question 16

According to Goolsbee and Syverson, how did incumbent airlines respond to the entry of Southwest Airlines?

Accepted Answer

A)  They raised airfares just before Southwest's arrival and then cut airfares when Southwest began operating. 
B)  They lowered airfares just before Southwest's arrival and then raised airfares when Southwest began operating. 
C)  They began cutting airfare as early as one to two years before Southwest began operating from the same airport. 
D)  They kept airfares unchanged before Southwest's arrival and then lowered airfares when Southwest began operating. 
A)  They raised airfares just before Southwest's arrival and then cut airfares when Southwest began operating. 
B)  They lowered airfares just before Southwest's arrival and then raised airfares when Southwest began operating. 
C)  They began cutting airfare as early as one to two years before Southwest began operating from the same airport. 
D)  They kept airfares unchanged before Southwest's arrival and then lowered airfares when Southwest began operating.

Question 17

At one time, tobacco companies vigorously fought lawsuits by their current and former customers, even though the cost of defending the lawsuits exceeded the amount of money demanded by the smokers. What type of strategic behavior were tobacco companies using?

Accepted Answer

A)  excess capacity 
B)  reputation 
C)  grim reaper 
D)  MAD 
A)  excess capacity 
B)  reputation 
C)  grim reaper 
D)  MAD

Question 18

(Table: Sports Illustrated and ESPN Magazines I) Payoffs represent profits in millions of dollars.   What is ESPN's dominant strategy?

Accepted Answer

A)  none 
B)  run the Brett Favre cover story 
C)  run the Tim Tebow cover story 
D)  run either cover story 
A)  none 
B)  run the Brett Favre cover story 
C)  run the Tim Tebow cover story 
D)  run either cover story

Question 19

(Table: Jack and Jill I)   If Jack chooses to climb the hill and Jill brings the pail, Jill's payoff is ____.

Accepted Answer

A)  0 
B)  10 
C)  20 
D)  30 
A)  0 
B)  10 
C)  20 
D)  30

Question 20

(Table: Jack and Jill I)   If Jack chooses to not climb the hill and Jill brings the pail, Jack's payoff is ____.

Accepted Answer

A)  0 
B)  10 
C)  20 
D)  30 
A)  0 
B)  10 
C)  20 
D)  30

(Table: Firms A and B XII) a. What is the Nash equilibrium if the game is played once with simultaneous moves? b. What is the Nash equilibrium if the game is played sequentially?

(Table: Firms 1 and 2 II) The payoffs are profits in millions of dollars. If Firm 1 follows a maximin strategy, the outcome of this game is:

(Table: History Channel and Animal Planet I) Payoffs represent profits in thousands of dollars. In this game, the Nash equilibria are:

The table contains letters that represent payoff values. If the strategy combination (B , Y) is a Nash equilibrium, then prove that the strategy combination (A , X) must also be a Nash equilibrium assuming there are no dominant strategies. Assume that no two letters will take on the same value.

(Table: Firms 1 and 2 III) Payoffs represent profits in millions of dollars. Firm 1's dominant strategy is ____.

Suppose two players use strategies that produce these payoffs: a. What are the pure-strategy Nash equilibria if any? b. What is the mixed-strategy Nash equilibrium?

Consider the following game. The choices of ____ represent a Nash Equilibrium in this game.

The following game:

(Table: Players A and B VII) In Table 1, ____ is a Nash Equilibrium.

Which of the following games is solvable by backward induction? I. a 3-period simultaneous game II. an infinitely repeated simultaneous game III. a 1-period simultaneous game IV. a sequential game

According to Goolsbee and Syverson, how did incumbent airlines respond to the entry of Southwest Airlines?

At one time, tobacco companies vigorously fought lawsuits by their current and former customers, even though the cost of defending the lawsuits exceeded the amount of money demanded by the smokers. What type of strategic behavior were tobacco companies using?

(Table: Sports Illustrated and ESPN Magazines I) Payoffs represent profits in millions of dollars. What is ESPN's dominant strategy?

(Table: Jack and Jill I) If Jack chooses to climb the hill and Jill brings the pail, Jill's payoff is ____.

(Table: Jack and Jill I) If Jack chooses to not climb the hill and Jill brings the pail, Jack's payoff is ____.

Adventures in Microeconomics

Supply and Demand

Using Supply and Demand to Analyze Markets

Consumer Behavior

Individual and Market Demand

Producer Behavior

Costs

Supply in a Competitive Market

Market Power and Monopoly

Market Power and Pricing Strategies

Imperfect Competition

Factor Markets

Investment, Time, and Insurance

General Equilibrium

Asymmetric Information

Externalities and Public Goods

Behavioral and Experimental Economics

Filters

Exam 12: Game Theory

(Table: Firms A and B XII) a. What is the Nash equilibrium if the game is played once with simultaneous moves? b. What is the Nash equilibrium if the game is played sequentially?

(Table: Firms 1 and 2 II) The payoffs are profits in millions of dollars. If Firm 1 follows a maximin strategy, the outcome of this game is:

(Table: History Channel and Animal Planet I) Payoffs represent profits in thousands of dollars. In this game, the Nash equilibria are:

The table contains letters that represent payoff values. If the strategy combination (B , Y) is a Nash equilibrium, then prove that the strategy combination (A , X) must also be a Nash equilibrium assuming there are no dominant strategies. Assume that no two letters will take on the same value.

(Table: Firms 1 and 2 III) Payoffs represent profits in millions of dollars. Firm 1's dominant strategy is ____.

Suppose two players use strategies that produce these payoffs: a. What are the pure-strategy Nash equilibria if any? b. What is the mixed-strategy Nash equilibrium?

Consider the following game. The choices of ____ represent a Nash Equilibrium in this game.

The following game:

(Table: Players A and B VII) In Table 1, ____ is a Nash Equilibrium.

Which of the following games is solvable by backward induction? I. a 3-period simultaneous game II. an infinitely repeated simultaneous game III. a 1-period simultaneous game IV. a sequential game

According to Goolsbee and Syverson, how did incumbent airlines respond to the entry of Southwest Airlines?

At one time, tobacco companies vigorously fought lawsuits by their current and former customers, even though the cost of defending the lawsuits exceeded the amount of money demanded by the smokers. What type of strategic behavior were tobacco companies using?

(Table: Sports Illustrated and ESPN Magazines I) Payoffs represent profits in millions of dollars. What is ESPN's dominant strategy?

(Table: Jack and Jill I) If Jack chooses to climb the hill and Jill brings the pail, Jill's payoff is ____.

(Table: Jack and Jill I) If Jack chooses to not climb the hill and Jill brings the pail, Jack's payoff is ____.

Adventures in Microeconomics

Supply and Demand

Using Supply and Demand to Analyze Markets

Consumer Behavior

Individual and Market Demand

Producer Behavior

Costs

Supply in a Competitive Market

Market Power and Monopoly

Market Power and Pricing Strategies

Imperfect Competition

Factor Markets

Investment, Time, and Insurance

General Equilibrium

Asymmetric Information

Externalities and Public Goods

Behavioral and Experimental Economics

Filters