Question 1

Unlike a one-shot game, in a repeated game:

Accepted Answer

A)  players have the opportunity to use mixed strategies. 
B)  each player's objective is to claim a greater payoff with the first move. 
C)  players have the opportunity to build trust and cooperation. 
D)  a player's prior reputation carries relatively little importance. 
E)  players are obliged to take independent actions. 
A)  players have the opportunity to use mixed strategies. 
B)  each player's objective is to claim a greater payoff with the first move. 
C)  players have the opportunity to build trust and cooperation. 
D)  a player's prior reputation carries relatively little importance. 
E)  players are obliged to take independent actions.

Question 2

A player involved in a one-shot game will:

Accepted Answer

A)  cooperate with its rivals due to the threat of punishment. 
B)  follow punitive strategies. 
C)  take actions aimed at creating a reputation with his rivals. 
D)  act to maximize its immediate payoff. 
E)  follow a tit-for-tat strategy. 
A)  cooperate with its rivals due to the threat of punishment. 
B)  follow punitive strategies. 
C)  take actions aimed at creating a reputation with his rivals. 
D)  act to maximize its immediate payoff. 
E)  follow a tit-for-tat strategy.

Question 3

The following payoff table depicts a zero-sum game:
Table 10-4
 $\begin{array}{c}
\quad\quad\quad\text { Firm 2 }\
\begin{array} { | c | c | c | c | } 
\hline \text { Firm 1 } & \text { C1 } & \text { C2 } & \text { C3 } \
\hline \text { R1 } & 6 & - 6 & - 4 \
\hline \text { R2 } & - 1 & 3 & - 5 \
\hline \text { R3 } & 3 & 2 & 1 \
\hline
\end{array}
\end{array}$
-Refer to Table 10-4. The equilibrium of the zero-sum game is:

Accepted Answer

A)  R1 versus C1. 
B)  R1 versus C2. 
C)  R2 versus C2. 
D)  R3 versus C3. 
E)  R2 versus C3. 
A)  R1 versus C1. 
B)  R1 versus C2. 
C)  R2 versus C2. 
D)  R3 versus C3. 
E)  R2 versus C3.

Question 4

Two firms are poised to enter a retail market. Entering the market will be profitable for one firm only if the other firm does not enter the market. This is an example of:

Accepted Answer

A)  prisoner's dilemma. 
B)  a repeated game with contingent strategies. 
C)  bargaining game with multiple equilibria 
D)  a game with a first-mover advantage. 
E)  a zero-sum game. 
A)  prisoner's dilemma. 
B)  a repeated game with contingent strategies. 
C)  bargaining game with multiple equilibria 
D)  a game with a first-mover advantage. 
E)  a zero-sum game.

Question 5

Which one of the following is not a feature of the tit-for-tat strategy?

Accepted Answer

A)  Limited punishments for an opponent's defections. 
B)  A cooperative high-payoff equilibrium. 
C)  Perpetual punishments for an opponent's defections. 
D)  Neither firm has an incentive to be the first to defect. 
E)  The use of contingent strategies to resolve the prisoner's dilemma. 
A)  Limited punishments for an opponent's defections. 
B)  A cooperative high-payoff equilibrium. 
C)  Perpetual punishments for an opponent's defections. 
D)  Neither firm has an incentive to be the first to defect. 
E)  The use of contingent strategies to resolve the prisoner's dilemma.

Question 6

How does strategy formulation differ for zero-sum and non-zero-sum games?

Accepted Answer

Zero-sum games are situations of pure ri

Question 7

The payoff table below depicts price competition between two electronics stores. (Payoffs are weekly profits in thousands of dollars for each store.)
 $\begin{array}{c}
\quad\quad\quad\quad\quad\quad\quad\text { Circuit City's Prices }\
\begin{array} { | c | c | c | c | } 
\hline \text { Best Buy's Prices } & \text { High } & \text { Medium } & \text { Low } \
\hline \text { High } & 100,100 & 75,120 & 70,90 \
\hline \text { Medium } & 120,65 & 80,80 & 65,110 \
\hline \text { Low } & 110,50 & 85,75 & 60,60 \
\hline
\end{array}
\end{array}$ (a) The stores determine their strategies independently of one another. What are the stores' respective equilibrium strategies? Explain briefly.
(b) Suppose that each store adopts a price matching strategy such that each pledges to instantly match any lower price by its rival. What will be the effect on the stores’ chosen prices? Will consumers benefit from such policies? Explain  riefly.

Accepted Answer

If price matching is the rule, the store

Question 8

Which of the following is true of a sequential game with perfect information?

Accepted Answer

A)  To obtain a complete solution to a sequential game, there should be perfect information. 
B)  A sequential game with infinite moves can be solved backward to obtain a complete solution. 
C)  The equilibrium in a sequential game is always a second-best solution. 
D)  A sequential game does not have a stable equilibrium. 
E)  The outcome in a sequential game is inferior to the optimal outcome. 
A)  To obtain a complete solution to a sequential game, there should be perfect information. 
B)  A sequential game with infinite moves can be solved backward to obtain a complete solution. 
C)  The equilibrium in a sequential game is always a second-best solution. 
D)  A sequential game does not have a stable equilibrium. 
E)  The outcome in a sequential game is inferior to the optimal outcome.

Question 9

In an infinitely repeated prisoner's dilemma (such as a repeated price war):

Accepted Answer

A)  repeated defection is the only equilibrium. 
B)  there are two different equilibria: repeated defection and repeated cooperation. 
C)  repeated cooperation is the only equilibrium. 
D)  each player cooperates in the early stages, but defects near the end of the game. 
E)  there is no stable equilibrium strategy for either player. 
A)  repeated defection is the only equilibrium. 
B)  there are two different equilibria: repeated defection and repeated cooperation. 
C)  repeated cooperation is the only equilibrium. 
D)  each player cooperates in the early stages, but defects near the end of the game. 
E)  there is no stable equilibrium strategy for either player.

Question 10

Discuss the role of communication in a cooperative agreement.

Accepted Answer

In a two person zero-sum game, communica

Question 11

Discuss the role of reputation in strategic settings.

Accepted Answer

The notion of reputation represents riva

Question 12

The payoff table shows the competition between a new entrant (Firm 1) and an incumbent firm (Firm 2). Determine each firm's equilibrium strategy.
 $\begin{array}{l}
\quad\quad\quad\quad\quad\quad\quad\quad\quad\text { Firm } 2\
\begin{array} { | c | c | c | } 
\hline \text { Firm 1 } & \text { Fight } & \text { High price } \
\hline \text { Enter } & - 10,15 & 10,10 \
\hline \text { Not enter } & 0,20 & 0,20 \
\hline
\end{array}
\end{array}$

Accepted Answer

Firm 1's equilibrium

Question 13

Determine each player's equilibrium mixed strategy in the following non-zero-sum game.
 $\begin{array}{c}
\quad\quad\text { Firm B }  \ 
 \begin{array}{ | c | c | c | } 
\hline \text { Firm A } & \text { Strategy W } & \text { Strategy Z } \
\hline \text { Strategy X } & 16 & 4 \
\hline \text { Strategy Y } & 6 & 10 \
\hline
\end{array}
\end{array}$

Accepted Answer

Firm A should use strategy X with probab

Question 14

Why is backward induction important in competitive strategy?

Accepted Answer

Backward induction is the practice of so

Question 15

Determine each player's equilibrium mixed strategy in the following non-zero-sum game.
 $\begin{array}{c}
 \quad\quad  \text { Firm N }  \
\begin{array} { | c | c | c | }
\hline \text { Firm M } & \text { Strategy P } & \text { Strategy Q } \
\hline \text { Strategy S } & 16,10 & 12,8 \
\hline \text { Strategy T } & 20,10 & 4,12 \
\hline
\end{array} 
\end{array}$

Accepted Answer

Firm M should use probabilities s and (1

Question 16

Why is communication an important factor in competitive situations?

Accepted Answer

Communication allows rivals to state int

Question 17

Construct a payoff table that depicts duopolists, each facing a kinked demand curve. With a kinked demand curve, all firms maintain the current price (at the kink in demand) unless conditions change drastically.

Accepted Answer

The payoff table shows the duopolist's p

Question 18

A Nash equilibrium is defined as the outcome that:

Accepted Answer

A)  results in equal payoffs to both players. 
B)  is unique and invariant to the strategy chosen by the other. 
C)  maximizes the sum of the players' payoffs. 
D)  results when both players lose by deviating from the equilibrium play. 
E)  maximizes each player's payoff against the strategy chosen by the other. 
A)  results in equal payoffs to both players. 
B)  is unique and invariant to the strategy chosen by the other. 
C)  maximizes the sum of the players' payoffs. 
D)  results when both players lose by deviating from the equilibrium play. 
E)  maximizes each player's payoff against the strategy chosen by the other.

Question 19

In a bargaining setting with perfect information:

Accepted Answer

A)  backward induction determines the equilibrium outcome. 
B)  there may be many possible equilibrium outcomes. 
C)  the equilibrium outcome calls for a 50-50 split of the "pie." 
D)  the situation represents a constant-sum game. 
E)  there is a dominant strategy equilibrium. 
A)  backward induction determines the equilibrium outcome. 
B)  there may be many possible equilibrium outcomes. 
C)  the equilibrium outcome calls for a 50-50 split of the "pie." 
D)  the situation represents a constant-sum game. 
E)  there is a dominant strategy equilibrium.

Question 20

Which of the following is true of a zero-sum game?

Accepted Answer

A)  The value of the game is equal to zero. 
B)  Each player always has a dominant strategy. 
C)  Each player's gain comes at the expense of the other. 
D)  There are only two players. 
E)  One player's payoff is independent of the other player's actions. 
A)  The value of the game is equal to zero. 
B)  Each player always has a dominant strategy. 
C)  Each player's gain comes at the expense of the other. 
D)  There are only two players. 
E)  One player's payoff is independent of the other player's actions.

Unlike a one-shot game, in a repeated game:

A player involved in a one-shot game will:

The following payoff table depicts a zero-sum game: Table 10-4 Firm 2 Firm 1 C1 C2 C3 R1 6 -6 -4 R2 -1 3 -5 R3 3 2 1 -Refer to Table 10-4. The equilibrium of the zero-sum game is:

Two firms are poised to enter a retail market. Entering the market will be profitable for one firm only if the other firm does not enter the market. This is an example of:

Which one of the following is not a feature of the tit-for-tat strategy?

How does strategy formulation differ for zero-sum and non-zero-sum games?

Which of the following is true of a sequential game with perfect information?

In an infinitely repeated prisoner's dilemma (such as a repeated price war):

Discuss the role of communication in a cooperative agreement.

Discuss the role of reputation in strategic settings.

The payoff table shows the competition between a new entrant (Firm 1) and an incumbent firm (Firm 2). Determine each firm's equilibrium strategy. Firm 2 Firm 1 Fight High price Enter -10,15 10,10 Not enter 0,20 0,20

Determine each player's equilibrium mixed strategy in the following non-zero-sum game. Firm B Firm A Strategy W Strategy Z Strategy X 16 4 Strategy Y 6 10

Why is backward induction important in competitive strategy?

Determine each player's equilibrium mixed strategy in the following non-zero-sum game. Firm N Firm M Strategy P Strategy Q Strategy S 16,10 12,8 Strategy T 20,10 4,12

Why is communication an important factor in competitive situations?

Construct a payoff table that depicts duopolists, each facing a kinked demand curve. With a kinked demand curve, all firms maintain the current price (at the kink in demand) unless conditions change drastically.

A Nash equilibrium is defined as the outcome that:

In a bargaining setting with perfect information:

Which of the following is true of a zero-sum game?

Introduction to Economic Decision Making

Optimal Decisions Using Marginal Analysis

Demand Analysis and Optimal Pricing

Estimating and Forecasting Demand

Production

Cost Analysis

Perfect Competition

Monopoly

Oligopoly

Regulation, Public Goods, and Benefit-Cost Analysis

Decision Making Under Uncertainty

The Value of Information

Asymmetric Information and Organizational Design

Bargaining and Negotiation

Linear Programming

Auctions and Competitive Bidding Available Online

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Exam 10: Game Theory and Competitive Strategy

Unlike a one-shot game, in a repeated game:

A player involved in a one-shot game will:

The following payoff table depicts a zero-sum game: Table 10-4 Firm 2 Firm 1 C1 C2 C3 R1 6 -6 -4 R2 -1 3 -5 R3 3 2 1 -Refer to Table 10-4. The equilibrium of the zero-sum game is:

Two firms are poised to enter a retail market. Entering the market will be profitable for one firm only if the other firm does not enter the market. This is an example of:

Which one of the following is not a feature of the tit-for-tat strategy?

How does strategy formulation differ for zero-sum and non-zero-sum games?

Which of the following is true of a sequential game with perfect information?

In an infinitely repeated prisoner's dilemma (such as a repeated price war):

Discuss the role of communication in a cooperative agreement.

Discuss the role of reputation in strategic settings.

The payoff table shows the competition between a new entrant (Firm 1) and an incumbent firm (Firm 2). Determine each firm's equilibrium strategy. Firm 2 Firm 1 Fight High price Enter -10,15 10,10 Not enter 0,20 0,20

Determine each player's equilibrium mixed strategy in the following non-zero-sum game. Firm B Firm A Strategy W Strategy Z Strategy X 16 4 Strategy Y 6 10

Why is backward induction important in competitive strategy?

Determine each player's equilibrium mixed strategy in the following non-zero-sum game. Firm N Firm M Strategy P Strategy Q Strategy S 16,10 12,8 Strategy T 20,10 4,12

Why is communication an important factor in competitive situations?

Construct a payoff table that depicts duopolists, each facing a kinked demand curve. With a kinked demand curve, all firms maintain the current price (at the kink in demand) unless conditions change drastically.

A Nash equilibrium is defined as the outcome that:

In a bargaining setting with perfect information:

Which of the following is true of a zero-sum game?

Introduction to Economic Decision Making

Optimal Decisions Using Marginal Analysis

Demand Analysis and Optimal Pricing

Estimating and Forecasting Demand

Production

Cost Analysis

Perfect Competition

Monopoly

Oligopoly

Regulation, Public Goods, and Benefit-Cost Analysis

Decision Making Under Uncertainty

The Value of Information

Asymmetric Information and Organizational Design

Bargaining and Negotiation

Linear Programming

Auctions and Competitive Bidding Available Online

Filters