Question 1

A scorched earth policy is an example of a:

Accepted Answer

A)  Strategic move. 
B)  First-mover advantage. 
C)  Dominant strategy. 
D)  Weakly dominated strategy. 
E)  Guarantee. 
A)  Strategic move. 
B)  First-mover advantage. 
C)  Dominant strategy. 
D)  Weakly dominated strategy. 
E)  Guarantee.

Question 2

-Consider the oil-drilling game depicted in Figure 5.4 in which payoffs are in millions of dollars. Suppose that this game is played repeatedly and the probability that the game will end in the next round is 10 percent and the discount rate is 25 percent. What is the present value of the stream of payoffs by cooperating?

Accepted Answer

A)  An amount between $85.7 and $85.8 million. 
B)  An amount between $113.7 and $113.8 million. 
C)  An amount between $185.7 and $185.8 million. 
D)  An amount between $210.8 and $210.9 million. 
E)  None of the above. 
A)  An amount between $85.7 and $85.8 million. 
B)  An amount between $113.7 and $113.8 million. 
C)  An amount between $185.7 and $185.8 million. 
D)  An amount between $210.8 and $210.9 million. 
E)  None of the above.

Question 3

-Consider the pricing game depicted in Figure 5.5 in which payoffs are in millions of dollars. Suppose that this game is played repeatedly and the probability that the game will end in the next stage is 5 percent. For what discount rate will a firm be indifferent between cooperating and defecting?

Accepted Answer

A)  1.33 percent. 
B)  1.67 percent. 
C)  2.33 percent. 
D)  2.67 percent. 
E)  3.33 percent. 
A)  1.33 percent. 
B)  1.67 percent. 
C)  2.33 percent. 
D)  2.67 percent. 
E)  3.33 percent.

Question 4

-Consider the noncooperative oil-drilling game depicted in Figure 5.4 in which payoffs are in millions of dollars. If this game is played five times, the Nash equilibrium strategy profile in the first round is:

Accepted Answer

A)  {Narrow, Narrow}. 
B)  {Narrow, Wide}. 
C)  {Wide, Narrow}. 
D)  {Wide, Wide}. 
A)  {Narrow, Narrow}. 
B)  {Narrow, Wide}. 
C)  {Wide, Narrow}. 
D)  {Wide, Wide}.

Question 5

-Consider the pricing game depicted in Figure 5.5 in which payoffs are in millions of dollars. Suppose that this game is played repeatedly and the probability that the game will end in the next stage is 1 percent. For what discount rate will a firm be indifferent between cooperating and defecting?

Accepted Answer

A)  2.5 percent. 
B)  4.25 percent. 
C)  5.6 percent. 
D)  8.5 percent. 
E)  10.25 percent. 
A)  2.5 percent. 
B)  4.25 percent. 
C)  5.6 percent. 
D)  8.5 percent. 
E)  10.25 percent.

Question 6

For preemption to be successful:

Accepted Answer

A)  It must give the initiating player a last-mover advantage. 
B)  It must give the initiating player a first-mover advantage. 
C)  The initiating player must have a dominant strategy. 
D)  A static game must have a unique Nash equilibrium. 
E)  The initiating player must use a maximin-regret decision rule. 
A)  It must give the initiating player a last-mover advantage. 
B)  It must give the initiating player a first-mover advantage. 
C)  The initiating player must have a dominant strategy. 
D)  A static game must have a unique Nash equilibrium. 
E)  The initiating player must use a maximin-regret decision rule.

Question 7

-Consider the pricing game depicted in Figure 5.5 in which payoffs are in millions of dollars. Suppose that this game is played repeatedly and the discount rate is 1 percent. What is the probability that the game will end if the players are indifferent between cooperating and defecting?

Accepted Answer

A)  Around 1.3 percent. 
B)  Around 3.3 percent. 
C)  Around 5.3 percent. 
D)  Around 7.6 percent. 
E)  None of the above. 
A)  Around 1.3 percent. 
B)  Around 3.3 percent. 
C)  Around 5.3 percent. 
D)  Around 7.6 percent. 
E)  None of the above.

Question 8

-Consider the pricing game depicted in Figure 5.5 in which the payoffs are in millions of dollars. If this game is played seven times, the Nash equilibrium strategy profile in the first stage is:

Accepted Answer

A)  {Low price, Low price}. 
B)  {Low price, High price}. 
C)  {High price, Low price}. 
D)  {High price, High price}. 
A)  {Low price, Low price}. 
B)  {Low price, High price}. 
C)  {High price, Low price}. 
D)  {High price, High price}.

Question 9

A tit-for-tat strategy is effective because it is:

Accepted Answer

A)  Transparent, balanced, affable, and provocative. 
B)  Fair, transparent, provocative, and forgiving. 
C)  Transparent, provocative, balanced, and affable. 
D)  Transparent, affable, provocative, and forgiving. 
E)  Transparent, fair, balanced, and provocative. 
A)  Transparent, balanced, affable, and provocative. 
B)  Fair, transparent, provocative, and forgiving. 
C)  Transparent, provocative, balanced, and affable. 
D)  Transparent, affable, provocative, and forgiving. 
E)  Transparent, fair, balanced, and provocative.

Question 10

A tit-for-tat strategy is effective because it is:

Accepted Answer

A)  Fair, balanced, transparent, and provocative. 
B)  Fair, transparent, provocative, and forgiving. 
C)  Transparent, provocative, balanced, and affable. 
D)  Balanced, transparent, provocative, and forgiving. 
E)  None of the above. 
A)  Fair, balanced, transparent, and provocative. 
B)  Fair, transparent, provocative, and forgiving. 
C)  Transparent, provocative, balanced, and affable. 
D)  Balanced, transparent, provocative, and forgiving. 
E)  None of the above.

Question 11

-Consider the pricing game depicted in Figure 5.5 in which payoffs are in millions of dollars. Suppose that this game is played repeatedly and the discount rate is 5 percent. What is the probability that the game will end if the players are indifferent between cooperating and defecting?

Accepted Answer

A)  Around 1.6 percent. 
B)  Around 2.5 percent. 
C)  Around 3.7 percent. 
D)  Around 4.5 percent. 
E)  Around 5.2 percent. 
A)  Around 1.6 percent. 
B)  Around 2.5 percent. 
C)  Around 3.7 percent. 
D)  Around 4.5 percent. 
E)  Around 5.2 percent.

Question 12

The probability that a two-player, repeated game comes to an end in each stage is 2. When 2 = 1, this game may be treated as:

Accepted Answer

A)  A one-time game. 
B)  A finitely-repeated game with a certain end. 
C)  A finitely-repeated game with an uncertain end. 
D)  An infinitely-repeated game. 
E)  Answers a and b are correct. 
A)  A one-time game. 
B)  A finitely-repeated game with a certain end. 
C)  A finitely-repeated game with an uncertain end. 
D)  An infinitely-repeated game. 
E)  Answers a and b are correct.

Question 13

Tit-for-tat:

Accepted Answer

A)  Is similar to backward induction. 
B)  Is an enforcement mechanism in repeated games where cooperation is possible. 
C)  Is the same thing as a scorched-earth policy. 
D)  Results in minimax payoffs. 
E)  None of the above. 
A)  Is similar to backward induction. 
B)  Is an enforcement mechanism in repeated games where cooperation is possible. 
C)  Is the same thing as a scorched-earth policy. 
D)  Results in minimax payoffs. 
E)  None of the above.

Question 14

The probability that a two-player, repeated game comes to an end in each stage is 2. When 0 < 2 < 1, this game may be treated as:

Accepted Answer

A)  A one-time game. 
B)  A finitely-repeated game with a certain end. 
C)  A finitely-repeated game with an uncertain end. 
D)  An infinitely-repeated game. 
E)  Answers a and b are correct. 
A)  A one-time game. 
B)  A finitely-repeated game with a certain end. 
C)  A finitely-repeated game with an uncertain end. 
D)  An infinitely-repeated game. 
E)  Answers a and b are correct.

Question 15

_____ is when a finitely-repeated game a certain end reduces to a series of one-time, static games.

Accepted Answer

A)  A first-mover advantage 
B)  A trigger strategy 
C)  Tit-for-tat 
D)  End-of-game problem 
E)  Preemption 
A)  A first-mover advantage 
B)  A trigger strategy 
C)  Tit-for-tat 
D)  End-of-game problem 
E)  Preemption

Question 16

An example of preemption is:

Accepted Answer

A)  Tit-for-tat. 
B)  Burning bridges. 
C)  Scorched earth. 
D)  Closing doors. 
E)  Answers a and c are correct. 
A)  Tit-for-tat. 
B)  Burning bridges. 
C)  Scorched earth. 
D)  Closing doors. 
E)  Answers a and c are correct.

Question 17

-Consider the two-stage, static game depicted in Figure 5.1 involving two companies that enter into an agreement to maximize total profits. The payoffs in this game are in millions of dollars. The optimal strategy for both firms is to:

Accepted Answer

A)  Play B in stage 1 and stage 2. 
B)  Play B in stage 1 and play A in stage 2. 
C)  Play C in stage 1 and stage 2. 
D)  Play B in stage 1 and play C in stage 2. 
E)  Play C in stage 1 and play B in stage 2. 
A)  Play B in stage 1 and stage 2. 
B)  Play B in stage 1 and play A in stage 2. 
C)  Play C in stage 1 and stage 2. 
D)  Play B in stage 1 and play C in stage 2. 
E)  Play C in stage 1 and play B in stage 2.

Question 18

In the text, the publishing company Houghton Mifflin was able to thwart Western Pacific's takeover bid by threatening to release its best-selling authors from their contractual obligations. This is an example of:

Accepted Answer

A)  Tit-for-tat. 
B)  Burning bridges. 
C)  Scorched earth. 
D)  Dirty pool. 
E)  Answers a, b and c are correct. 
A)  Tit-for-tat. 
B)  Burning bridges. 
C)  Scorched earth. 
D)  Dirty pool. 
E)  Answers a, b and c are correct.

Question 19

-Consider the two-stage game depicted in Figure 5.3 involving two companies that enter into an agreement to maximize total profits. The payoffs in this game are in millions of dollars. Silver's optimal strategy is to:

Accepted Answer

A)  Play Garnet in stage 1 and stage 2. 
B)  Play Garnet in stage 1 and play Peridot in stage 2. 
C)  Play Garnet in stage 1 and Diamond in stage 2. 
D)  Play Diamond in stage 1 and stage 2. 
E)  Play Diamond in stage 1 and play Garnet in stage 2. 
A)  Play Garnet in stage 1 and stage 2. 
B)  Play Garnet in stage 1 and play Peridot in stage 2. 
C)  Play Garnet in stage 1 and Diamond in stage 2. 
D)  Play Diamond in stage 1 and stage 2. 
E)  Play Diamond in stage 1 and play Garnet in stage 2.

Question 20

The end-of-game problem:

Accepted Answer

A)  Arises in finitely-repeated games with an uncertain end. 
B)  Occurs when each stage of a finitely-repeated game with a certain end effectively becomes the last stage. 
C)  Means that trigger strategies are enforceable. 
D)  Occurs when players make a move in the last stage of a finitely-repeated game that is different from the move made in the first stage of the game. 
E)  None of the above are correct. 
A)  Arises in finitely-repeated games with an uncertain end. 
B)  Occurs when each stage of a finitely-repeated game with a certain end effectively becomes the last stage. 
C)  Means that trigger strategies are enforceable. 
D)  Occurs when players make a move in the last stage of a finitely-repeated game that is different from the move made in the first stage of the game. 
E)  None of the above are correct.

A scorched earth policy is an example of a:

-Consider the pricing game depicted in Figure 5.5 in which payoffs are in millions of dollars. Suppose that this game is played repeatedly and the probability that the game will end in the next stage is 5 percent. For what discount rate will a firm be indifferent between cooperating and defecting?

-Consider the noncooperative oil-drilling game depicted in Figure 5.4 in which payoffs are in millions of dollars. If this game is played five times, the Nash equilibrium strategy profile in the first round is:

-Consider the pricing game depicted in Figure 5.5 in which payoffs are in millions of dollars. Suppose that this game is played repeatedly and the probability that the game will end in the next stage is 1 percent. For what discount rate will a firm be indifferent between cooperating and defecting?

For preemption to be successful:

-Consider the pricing game depicted in Figure 5.5 in which payoffs are in millions of dollars. Suppose that this game is played repeatedly and the discount rate is 1 percent. What is the probability that the game will end if the players are indifferent between cooperating and defecting?

-Consider the pricing game depicted in Figure 5.5 in which the payoffs are in millions of dollars. If this game is played seven times, the Nash equilibrium strategy profile in the first stage is:

A tit-for-tat strategy is effective because it is:

A tit-for-tat strategy is effective because it is:

-Consider the pricing game depicted in Figure 5.5 in which payoffs are in millions of dollars. Suppose that this game is played repeatedly and the discount rate is 5 percent. What is the probability that the game will end if the players are indifferent between cooperating and defecting?

The probability that a two-player, repeated game comes to an end in each stage is 2. When 2 = 1, this game may be treated as:

Tit-for-tat:

The probability that a two-player, repeated game comes to an end in each stage is 2. When 0 < 2 < 1, this game may be treated as:

_____ is when a finitely-repeated game a certain end reduces to a series of one-time, static games.

An example of preemption is:

-Consider the two-stage, static game depicted in Figure 5.1 involving two companies that enter into an agreement to maximize total profits. The payoffs in this game are in millions of dollars. The optimal strategy for both firms is to:

In the text, the publishing company Houghton Mifflin was able to thwart Western Pacific's takeover bid by threatening to release its best-selling authors from their contractual obligations. This is an example of:

-Consider the two-stage game depicted in Figure 5.3 involving two companies that enter into an agreement to maximize total profits. The payoffs in this game are in millions of dollars. Silver's optimal strategy is to:

The end-of-game problem:

Introduction to Game Theory

Noncooperative, One-Time, Static Games

Focal-Point and Evolutionary Equilibria

Infinitely-Repeated, Static Games

Mixing Pure Strategies

Static Games With Continuous Strategies

Imperfect Competition

Perfect Competition and Monopoly

Strategic Trade Policy

Dynamic Games With Complete

Bargaining

Pure Strategies With Uncertain Payoffs

Torts and Contracts

Auctions

Dynamic Games With Incomplete Information

Filters

Exam 5: Finitely-Repeated, Static Games

A scorched earth policy is an example of a:

-Consider the pricing game depicted in Figure 5.5 in which payoffs are in millions of dollars. Suppose that this game is played repeatedly and the probability that the game will end in the next stage is 5 percent. For what discount rate will a firm be indifferent between cooperating and defecting?

-Consider the noncooperative oil-drilling game depicted in Figure 5.4 in which payoffs are in millions of dollars. If this game is played five times, the Nash equilibrium strategy profile in the first round is:

-Consider the pricing game depicted in Figure 5.5 in which payoffs are in millions of dollars. Suppose that this game is played repeatedly and the probability that the game will end in the next stage is 1 percent. For what discount rate will a firm be indifferent between cooperating and defecting?

For preemption to be successful:

-Consider the pricing game depicted in Figure 5.5 in which payoffs are in millions of dollars. Suppose that this game is played repeatedly and the discount rate is 1 percent. What is the probability that the game will end if the players are indifferent between cooperating and defecting?

-Consider the pricing game depicted in Figure 5.5 in which the payoffs are in millions of dollars. If this game is played seven times, the Nash equilibrium strategy profile in the first stage is:

A tit-for-tat strategy is effective because it is:

A tit-for-tat strategy is effective because it is:

-Consider the pricing game depicted in Figure 5.5 in which payoffs are in millions of dollars. Suppose that this game is played repeatedly and the discount rate is 5 percent. What is the probability that the game will end if the players are indifferent between cooperating and defecting?

The probability that a two-player, repeated game comes to an end in each stage is 2. When 2 = 1, this game may be treated as:

Tit-for-tat:

The probability that a two-player, repeated game comes to an end in each stage is 2. When 0 < 2 < 1, this game may be treated as:

_____ is when a finitely-repeated game a certain end reduces to a series of one-time, static games.

An example of preemption is:

-Consider the two-stage, static game depicted in Figure 5.1 involving two companies that enter into an agreement to maximize total profits. The payoffs in this game are in millions of dollars. The optimal strategy for both firms is to:

In the text, the publishing company Houghton Mifflin was able to thwart Western Pacific's takeover bid by threatening to release its best-selling authors from their contractual obligations. This is an example of:

-Consider the two-stage game depicted in Figure 5.3 involving two companies that enter into an agreement to maximize total profits. The payoffs in this game are in millions of dollars. Silver's optimal strategy is to:

The end-of-game problem:

Introduction to Game Theory

Noncooperative, One-Time, Static Games

Focal-Point and Evolutionary Equilibria

Infinitely-Repeated, Static Games

Mixing Pure Strategies

Static Games With Continuous Strategies

Imperfect Competition

Perfect Competition and Monopoly

Strategic Trade Policy

Dynamic Games With Complete

Bargaining

Pure Strategies With Uncertain Payoffs

Torts and Contracts

Auctions

Dynamic Games With Incomplete Information

Filters