Question 1

The conditions that will always identify a Nash equilibrium include: ​

Accepted Answer

A)  ​subjectively getting into the mind of one's opponent 
B)  a reflexive assessment of the best reply responses 
C)  ​a prospective condition of improvement 
D)  a through c 
E)  ​b and c only 
A)  ​subjectively getting into the mind of one's opponent 
B)  a reflexive assessment of the best reply responses 
C)  ​a prospective condition of improvement 
D)  a through c 
E)  ​b and c only E

Question 2

An illustration of a non-credible commitment is the promise

Accepted Answer

A)  to not increase capacity in a declining industry 
B)  to match a new entrant's discount price 
C)  to enter a profitable industry 
D)  to restrain output to the quota assigned by a cartel 
E)  to exit in the face of projected losses. 
A)  to not increase capacity in a declining industry 
B)  to match a new entrant's discount price 
C)  to enter a profitable industry 
D)  to restrain output to the quota assigned by a cartel 
E)  to exit in the face of projected losses. D

Question 3

In ____ 2-person,nonzero-sum games there is no communication between the participants and no way to enforce agreements.

Accepted Answer

A)  noncooperative 
B)  cooperative 
C)  a and b 
D)  none of the above 
A)  noncooperative 
B)  cooperative 
C)  a and b 
D)  none of the above A

Question 4

Credible promises and hostage mechanisms can support a continuous stream of cooperative exchanges except when

Accepted Answer

A)  the promisor is better off fulfilling than ignoring his promise 
B)  neither party has a prior dominant strategy 
C)  the hostage can be revoked for just causes 
D)  the hostage is more valuable than any given exchange 
E)  the hostage is difficult to replace 
A)  the promisor is better off fulfilling than ignoring his promise 
B)  neither party has a prior dominant strategy 
C)  the hostage can be revoked for just causes 
D)  the hostage is more valuable than any given exchange 
E)  the hostage is difficult to replace

Question 5

Credibility in threats and commitments in sequential games is based on

Accepted Answer

A)  randomizing one's actions so they are unpredictable 
B)  explicit communications with competitors 
C)  effective scenario planning 
D)  analyzing best reply responses 
E)  none of the above 
A)  randomizing one's actions so they are unpredictable 
B)  explicit communications with competitors 
C)  effective scenario planning 
D)  analyzing best reply responses 
E)  none of the above

Question 6

In a game,a dominated strategy is one where:

Accepted Answer

A)  It is always the best strategy 
B)  It is always the worst strategy 
C)  It is the strategy that is the best among the group of worst possible strategies. 
D)  Is sometimes the best and sometimes the worst strategy 
A)  It is always the best strategy 
B)  It is always the worst strategy 
C)  It is the strategy that is the best among the group of worst possible strategies. 
D)  Is sometimes the best and sometimes the worst strategy

Question 7

If one-time gains from defection are always less than the discounted present value of an infinite time stream of cooperative payoffs at some given discount rate,the decision-makers have escaped

Accepted Answer

A)  the Folk Theorem 
B)  the law of large numbers 
C)  the Prisoner's dilemma 
D)  the paradox of large numbers 
E)  the strategy of recusal 
A)  the Folk Theorem 
B)  the law of large numbers 
C)  the Prisoner's dilemma 
D)  the paradox of large numbers 
E)  the strategy of recusal

Question 8

In making promises that are not guaranteed by third parties and in imposing penalties that are not enforced by third parties,all of the following are credibility-enhancing mechanisms except

Accepted Answer

A)  establishing a bond forfeited by violating the commitment 
B)  investing in a non-redeployable reputational asset tied to the promise or threat 
C)  interrupting the communication of negotiated compromises 
D)  offering a warranty 
E)  delivering a hostage (e.g.,a patent license triggered by violating the promise) 
A)  establishing a bond forfeited by violating the commitment 
B)  investing in a non-redeployable reputational asset tied to the promise or threat 
C)  interrupting the communication of negotiated compromises 
D)  offering a warranty 
E)  delivering a hostage (e.g.,a patent license triggered by violating the promise)

Question 9

When there is an Equilibrium (or a Nash Equilibrium),we expect that:

Accepted Answer

A)  once the firms get there,no one will change their strategy. 
B)  firms will tend to select a randomized strategy. 
C)  neither firm will care what it does. 
D)  this is always a dominated strategy. 
A)  once the firms get there,no one will change their strategy. 
B)  firms will tend to select a randomized strategy. 
C)  neither firm will care what it does. 
D)  this is always a dominated strategy.

Question 10

Suppose a new low cost discount firm must decide in advance between introducing LARGE or SMALL capacity in a licensed cable TV market where the incumbent then will decide on a HIGH or MATCHING pricing response.If the following table describes the payoffs from various combinations of these strategies,what capacity will the new entrant choose and why?

Accepted Answer

The new entrant must recognize that the

Question 11

To trust a potential cooperator until the first defection and then never cooperate thereafter is

Accepted Answer

A)  a dominant strategy 
B)  an irrational strategy 
C)  a grim trigger strategy 
D)  a non-cooperative finite game strategy 
E)  a subgame imperfect strategy 
A)  a dominant strategy 
B)  an irrational strategy 
C)  a grim trigger strategy 
D)  a non-cooperative finite game strategy 
E)  a subgame imperfect strategy

Question 12

The difference between cooperative and non-cooperative games is

Accepted Answer

A)  cooperative games allow side payments to support collusion 
B)  non-cooperative games encourage communication of sensitive information between arms-length competitors 
C)  cooperative games involve randomized behavior 
D)  cooperative games necessitate an explicit order of play 
E)  inconsequential except when players have contractual relationships 
A)  cooperative games allow side payments to support collusion 
B)  non-cooperative games encourage communication of sensitive information between arms-length competitors 
C)  cooperative games involve randomized behavior 
D)  cooperative games necessitate an explicit order of play 
E)  inconsequential except when players have contractual relationships

Question 13

Essential components of a game include all of the following except:

Accepted Answer

A)  players 
B)  payoffs 
C)  actions 
D)  an information set 
E)  cooperation 
A)  players 
B)  payoffs 
C)  actions 
D)  an information set 
E)  cooperation

Question 14

Retailers A and B anticipate many repetitions of the following pricing game in which they must choose between discounting or maintaining higher prices.Under what circumstances will store A resist discounting and choose MAINTAIN?

Accepted Answer

Store A has a dominant strategy to disco

Question 15

An inverse intensity customer sorting rule is one in which

Accepted Answer

A)  customers with high willingness to pay secure the discounted goods 
B)  customers are rationed randomly between the discounted and full price goods 
C)  no customers purchase below their willingness to pay 
D)  customers with the lowest willingness to pay secure the discounted goods 
E)  brand loyalty allows the incumbent to retain its regular customers 
A)  customers with high willingness to pay secure the discounted goods 
B)  customers are rationed randomly between the discounted and full price goods 
C)  no customers purchase below their willingness to pay 
D)  customers with the lowest willingness to pay secure the discounted goods 
E)  brand loyalty allows the incumbent to retain its regular customers

Question 16

If the city-pair route from Orlando to New Orleans is served by only two air carriers,Northwest and Delta,and if the payoffs from discounting or maintaining high prices are as below,what behavior would you predict for Delta in a one-play game and why?

Accepted Answer

Observing no dominant strategy,Delta has

Question 17

The Prisoner's Dilemma involves two spies who are held in separate soundproof rooms.But even if the two spies could communicate,what makes it difficult for them to achieve the cooperative solution (both not confessing)?

Accepted Answer

A)  The problem is their lack of information. 
B)  The problem is that it is a nonzero sum game. 
C)  The problem is that both spies have incentives to double cross each other. 
D)  The problem is that all the outcomes are not particularly good for either player. 
A)  The problem is their lack of information. 
B)  The problem is that it is a nonzero sum game. 
C)  The problem is that both spies have incentives to double cross each other. 
D)  The problem is that all the outcomes are not particularly good for either player.

Question 18

If two firms operate in a market that is characterized as being a Prisoner's Dilemma,and the two strategies given them are to restrict output or expand output,which of the following strategy pairs would represent the cooperative solution in a duopoly for firm 1 and firm 2,and firm 1 given first in each pair?

Accepted Answer

A)  {expand output,restrict output} 
B)  {restrict output,expand output} 
C)  {restrict output,restrict output} 
D)  {expand output,expand output} 
A)  {expand output,restrict output} 
B)  {restrict output,expand output} 
C)  {restrict output,restrict output} 
D)  {expand output,expand output}

Question 19

In choosing whether to deliver to six or seven neighborhoods,Harry's Pizzeria has to take into account not only its own costs but the delivery area response of its competitor Pizza Spinners.If the payoffs per week from delivering in six and seven neighborhoods are as displayed in Exhibit 13-1,what will Harry's Pizzeria choose and why?

Accepted Answer

Harry's has no dominant strategy.However

Question 20

An efficient customer sorting rule is one in which

Accepted Answer

A)  customers with high willingness to pay secure the discounted goods 
B)  customers are rationed randomly between the discounted and full price goods 
C)  no customer purchase below her willingness to pay 
D)  customers with the lowest willingness to pay secure the discount goods 
E)  brand loyalty allows the incumbent to retain its regular customers 
A)  customers with high willingness to pay secure the discounted goods 
B)  customers are rationed randomly between the discounted and full price goods 
C)  no customer purchase below her willingness to pay 
D)  customers with the lowest willingness to pay secure the discount goods 
E)  brand loyalty allows the incumbent to retain its regular customers

The conditions that will always identify a Nash equilibrium include:

An illustration of a non-credible commitment is the promise

In ____ 2-person,nonzero-sum games there is no communication between the participants and no way to enforce agreements.

Credible promises and hostage mechanisms can support a continuous stream of cooperative exchanges except when

Credibility in threats and commitments in sequential games is based on

In a game,a dominated strategy is one where:

If one-time gains from defection are always less than the discounted present value of an infinite time stream of cooperative payoffs at some given discount rate,the decision-makers have escaped

In making promises that are not guaranteed by third parties and in imposing penalties that are not enforced by third parties,all of the following are credibility-enhancing mechanisms except

When there is an Equilibrium (or a Nash Equilibrium),we expect that:

To trust a potential cooperator until the first defection and then never cooperate thereafter is

The difference between cooperative and non-cooperative games is

Essential components of a game include all of the following except:

Retailers A and B anticipate many repetitions of the following pricing game in which they must choose between discounting or maintaining higher prices.Under what circumstances will store A resist discounting and choose MAINTAIN?

An inverse intensity customer sorting rule is one in which

If the city-pair route from Orlando to New Orleans is served by only two air carriers,Northwest and Delta,and if the payoffs from discounting or maintaining high prices are as below,what behavior would you predict for Delta in a one-play game and why?

The Prisoner's Dilemma involves two spies who are held in separate soundproof rooms.But even if the two spies could communicate,what makes it difficult for them to achieve the cooperative solution (both not confessing)?

An efficient customer sorting rule is one in which

Introduction and Goals of the Firm

Fundamental Economic Concepts

Demand Analysis

Estimating Demand

Business and Economic Forecasting

Managing in the Global Economy

Production Economics

Cost Analysis

Applications of Cost Theory

Prices,output,and Strategy: Pure and Monopolistic Competition

Price and Output Determination: Monopoly and Dominant Firms

Price and Output Determination: Oligopoly

Pricing Techniques and Analysis

Contracting,governance,and Organizational Form

Government Regulation

Long-Term Investment Analysis

Filters

Exam 13: Best-Practice Tactics: Game Theory

The conditions that will always identify a Nash equilibrium include: ​

An illustration of a non-credible commitment is the promise

In ____ 2-person,nonzero-sum games there is no communication between the participants and no way to enforce agreements.

Credible promises and hostage mechanisms can support a continuous stream of cooperative exchanges except when

Credibility in threats and commitments in sequential games is based on

In a game,a dominated strategy is one where:

If one-time gains from defection are always less than the discounted present value of an infinite time stream of cooperative payoffs at some given discount rate,the decision-makers have escaped

In making promises that are not guaranteed by third parties and in imposing penalties that are not enforced by third parties,all of the following are credibility-enhancing mechanisms except

When there is an Equilibrium (or a Nash Equilibrium),we expect that:

To trust a potential cooperator until the first defection and then never cooperate thereafter is

The difference between cooperative and non-cooperative games is

Essential components of a game include all of the following except:

Retailers A and B anticipate many repetitions of the following pricing game in which they must choose between discounting or maintaining higher prices.Under what circumstances will store A resist discounting and choose MAINTAIN?

An inverse intensity customer sorting rule is one in which

If the city-pair route from Orlando to New Orleans is served by only two air carriers,Northwest and Delta,and if the payoffs from discounting or maintaining high prices are as below,what behavior would you predict for Delta in a one-play game and why?

The Prisoner's Dilemma involves two spies who are held in separate soundproof rooms.But even if the two spies could communicate,what makes it difficult for them to achieve the cooperative solution (both not confessing)?

An efficient customer sorting rule is one in which

Introduction and Goals of the Firm

Fundamental Economic Concepts

Demand Analysis

Estimating Demand

Business and Economic Forecasting

Managing in the Global Economy

Production Economics

Cost Analysis

Applications of Cost Theory

Prices,output,and Strategy: Pure and Monopolistic Competition

Price and Output Determination: Monopoly and Dominant Firms

Price and Output Determination: Oligopoly

Pricing Techniques and Analysis

Contracting,governance,and Organizational Form

Government Regulation

Long-Term Investment Analysis

Filters

The conditions that will always identify a Nash equilibrium include: