Exam 18: Game Theory and Strategic Choices

An interaction between two or more persons is considered a strategic interaction when:

Which of the following is an example of an anti-coordination game?

When all players follow a Grim Trigger strategy, the result is:

In the classic Prisoners' Dilemma featuring two accomplices in crime, the equilibrium of the game is for both accomplices to confess. In game theory, this is what would be called a:

When all players have a common interest in coordinating their choices, there is:

(Figure: Payoff Matrix for George and Garner) Use Figure: Payoff Matrix for George and Garner. The figure describes two people who sell handmade porcelain figurines in San Francisco. Both George and Garner have two strategies available to them: to produce 5,000 figurines each month or to produce 7,000 figurines each month. The combined profits of the two are maximized if George produces _____ figurines and Garner produces _____ figurines. ​ ​

(Figure: Payoff Matrix for Alex and Sybil) Use Figure: Payoff Matrix for Alex and Sybil. Alex and Sybil are the only producers of frozen yogurt in their town. Every week, each decides how much frozen yogurt to produce for the following week. The figure shows the profit per week earned by their two firms. Suppose the firms each decide to produce a low quantity initially and adopt a Grim trigger strategy for the following weeks. After a few weeks, Alex's weekly profit would be _____, and Sybil's weekly profit would be _____. ​

Use the table about Hikaru and his parents to answer the question. What is this kind of table called? \text { Table: Hikaru and His Parents }\\ \begin{array}{l} \begin{array} { | l | l | l | } \hline & { \begin{array} { l } \text { His parents agree to pay } \\ \text { Hikaru's college tuition. } \end{array} } & { \begin{array} { c } \text { His parents do not pay } \\ \text { Hikaru's college tuition. } \end{array} } \\ \hline \begin{array} { l } \text { Hikaru works part-time in } \\ \text { high school and saves most of } \\ \text { his income. } \end{array} & \begin{array} { l } \text { Hikaru starts college right } \\ \text { after high school with no debt } \\ \text { and has savings when he } \\ \text { graduates from college. } \end{array} & \begin{array} { l } \text { Hikaru starts college right } \\ \text { after high school with no debt } \\ \text { for at least one year. } \end{array} \\ \hline \begin{array} { l } \text { Hikaru does not work or save } \\ \text { in high school. } \end{array} & \begin{array} { l } \text { Hikaru starts college right } \\ \text { after high school with no } \\ \text { debt. } \end{array} & \begin{array} { l } \text { Hikaru takes out a student } \\ \text { loan or delays college. } \end{array} \\ \hline \end{array} \end{array}

Suppose that Avery and Stacey are going shopping at the local mall and that each decides independently whether to buy many items or few items. If both shoppers buy a few items, both will receive 70 utils; if both buy many items, both will receive 100 utils. If one buys many items, and the other buys few items, the one who buys many items will receive 150 utils, while the other will receive 40 utils. What is Stacey's BEST response?

Game theory is a useful tool to study strategic interactions as many decisions are characterized by:

Use the table, with data for workers and businesses, to answer the question. The payoff cells are labeled A, B, C, and D { \text { Table: High Wage or Low Wage? } } \\ \begin{array} { | l | l | l | } \hline & { \begin{array} { c } \text { Businesses create unskilled } \\ \text { jobs. } \end{array} } & { \begin{array} { c } \text { Businesses create skilled } \\ \text { jobs. } \end{array} } \\ \hline \text { Workers don't get training. } & \text { A. A low-skilled labor market } & \begin{array} { l } \text { B. A shortage of skilled } \\ \text { workers } \end{array} \\ \hline \text { Workers get training. } & \text { C. A shortage of skilled jobs } & \begin{array} { l } \text { D. A high-skilled labor } \\ \text { market } \end{array} \\ \hline \end{array} Which of the following would help lead to D, the best outcome?

Use the table, with data for a company and available workers, to answer the question. A company wants certified workers for its production and is trying to decide whether to hire only workers who already have certifications or to hire untrained workers and provide on-the-job certification training. Those entering the workforce are trying to decide whether to seek certification training in order to get a stable job. What type of game is represented in this payoff table? $\text { Table: Who Is Hired? }$ Available workers have certifications. Available workers are untrained. The company hires only certified workers. It's easy for the company to hire and for workers to find a job. The company has hiring problems, and workers are not hired. The company hires untrained workers and provides on-the- job certification training. Workers are overqualified and not hired, and the company has hiring problems. Available workers are hired and trained.

(Figure: Payoff Matrix for Antojito and Carolina Reaper) Use Figure: Payoff Matrix for Antojito and Carolina Reaper. The BEST response for Carolina Reaper is: ​

The strategic advantage that can follow from taking an action that adapts to your rival's choice is a:

(Figure: Prisoners' Dilemma for Thelma and Louise) Use Figure: Prisoners' Dilemma for Thelma and Louise. Thelma and Louise are arrested and jailed for bank robbery. Given the payoff matrix in the figure, the BEST response for Louise is: ​

(Figure: Nike and Reebok Sales) Use Figure: Nike and Reebok Sales. Reebok and Nike must decide whether to have a sale or not, based on the potential economic profits shown in the table. The Nash equilibrium in this game is: ​

Which of the following is NOT one of the four steps for making good strategic decisions?

Coordination problems can be solved through each of the following approaches EXCEPT:

Game theory is helpful in analyzing situations in which there is _____ the decision makers.

Suppose that Avery and Stacey are going shopping at the local mall and that each decides independently whether to buy many items or few items. If both shoppers buy a few items, both will receive 70 utils; if both buy many items, both will receive 100 utils. If one buys many items, and the other buys few items, the one who buys many items will receive 150 utils, while the other will receive 40 utils. What is the Nash equilibrium?