Question 1

A maximum strategy

Accepted Answer

A)  maximizes the minimum payoff. 
B)  minimizes the maximum payoff. 
C)  maximizes the payoff of one player, but minimizes the payoff of the other. 
D)  maximizes the minimum joint profits of the players.

Question 2

When firms select the solution that is better for all parties,the ________ is satisfied.

Accepted Answer

A)  Nash equilibrium condition 
B)  Pareto Criterion 
C)  coordination game requirement 
D)  pure strategy requirement

Question 3

When a bargaining solution is reached

Accepted Answer

A)  each player receives a net surplus greater than or equal to zero. 
B)  we have a Nash equilibrium. 
C)  the sum of the net surpluses is the Nash product. 
D)  Both A and C.

Question 4

Common knowledge in game theory

Accepted Answer

A)  is information known to be known by all players. 
B)  is required for dynamic games. 
C)  is complete. 
D)  Both A and B.

Question 5

Rock-paper-scissors (Roshambo)is an example of a ________ game.

Accepted Answer

A)  simultaneous 
B)  sequential 
C)  dominant strategy 
D)  weakly dominant

Question 6

A coordination game

Accepted Answer

A)  is a game with multiple Nash equilibria where players can credibly coordinate to select one of the equilibria. 
B)  is a game where players coordinate to maximize joint profits. 
C)  cannot be solved with cheap talk. 
D)  always has one Nash equilibrium and no dominated strategies.

Question 7

The term prisoners' dilemma refers to a game in which

Accepted Answer

A)  there are no Nash equilibria. 
B)  there are no dominant strategies. 
C)  the payoff from both players playing their dominant strategies is the same for each player. 
D)  the payoff from both players playing their dominant strategies is not the highest payoff possible.

Question 8

If a game contains private information,then

Accepted Answer

A)  the game's outcome is affected. 
B)  firms will engage in cheap talk to coordinate their actions. 
C)  players will decide not to play the game. 
D)  third-party negotiations are necessary to resolve the information gap.

Question 9

Common knowledge in game theory

Accepted Answer

A)  is information known by all players. 
B)  is required for static games. 
C)  does not impact the outcome of the game, since everyone has the information. 
D)  Both A and B.

Question 10

-The above figure shows the payoffs to two airlines,A and B,of serving a particular route.Is there a Nash equilibrium? What is it? Explain.

Accepted Answer

The answer of 
-The above figure shows the payoffs to...

Question 11

Firms in an oligopolistic market ________ because they are ________.

Accepted Answer

A)  attempt to predict the behavior of other firms; strategically interdependent 
B)  form cartels; unable to predict the behavior of other firms 
C)  ignore other firms' actions; strategically independent 
D)  advertise; unable to differentiate their products.

Question 12

-The above figure shows a payoff matrix for two firms,A and B,that must choose between a high-price strategy and a low-price strategy.For firm B

Accepted Answer

A)  setting a high price is the dominant strategy. 
B)  setting a low price is the dominant strategy. 
C)  there is no dominant strategy. 
D)  doing the opposite of firm A is always the best strategy.

Question 13

Suppose two firms,A and B,are simultaneously considering entry into a new market.If neither enters,both earn zero.If both enter,they both lose 100.If one firm enters,it gains 50 while the other earns zero.Set up the payoff matrix for this game and determine if any Nash equilibria exist.Can you predict the outcome? What if firm A gets to decide first?

Accepted Answer

The answer of Suppose two firms,A and B,are simultaneously considering...

Question 14

In game theory,we usually assume that all players

Accepted Answer

A)  act rationally. 
B)  use the information available to them to decide on a best strategy. 
C)  know about the payoffs of the other players. 
D)  All of the above.

Question 15

When neither player has a dominant strategy

Accepted Answer

A)  game theory will not provide information. 
B)  no Nash equilibrium exists. 
C)  at least one Nash equilibrium exists. 
D)  the game cannot be analyzed.

Question 16

Which of the following is a simultaneous decision game?

Accepted Answer

A)  tic-tac-toe 
B)  chess 
C)  poker 
D)  rock-paper-scissors

Question 17

Which of the following can always be used to determine the outcome when there are multiple Nash equilibria?

Accepted Answer

A)  the Pareto Criterion 
B)  cheap talk 
C)  Both A and B 
D)  None of the above.

Question 18

A mixed strategy may

Accepted Answer

A)  be part of a Nash equilibrium. 
B)  be a set of probabilities of selecting each possible action. 
C)  lead identical firms to choose different actions. 
D)  All of the above.

Question 19

"Cheap talk" is considered cheap because

Accepted Answer

A)  communications via phone or email these days has a cost that is close to zero. 
B)  a firm can say anything, but may actually do something different. 
C)  the cost of talking is far outweighed by the gains to be made in coordinating efforts. 
D)  firms avoid the costs of hiring lawyers.

Question 20

A game includes

Accepted Answer

A)  a strategy. 
B)  payoffs. 
C)  rules. 
D)  All of the above.

Exam 12: Game Theory and Business Strategy

A maximum strategy

When firms select the solution that is better for all parties,the ________ is satisfied.

When a bargaining solution is reached

Common knowledge in game theory

Rock-paper-scissors (Roshambo) is an example of a ________ game.

A coordination game

The term prisoners' dilemma refers to a game in which

If a game contains private information,then

Common knowledge in game theory

-The above figure shows the payoffs to two airlines,A and B,of serving a particular route.Is there a Nash equilibrium? What is it? Explain.

Firms in an oligopolistic market because they are .

-The above figure shows a payoff matrix for two firms,A and B,that must choose between a high-price strategy and a low-price strategy.For firm B

In game theory,we usually assume that all players

When neither player has a dominant strategy

Which of the following is a simultaneous decision game?

Which of the following can always be used to determine the outcome when there are multiple Nash equilibria?

A mixed strategy may

"Cheap talk" is considered cheap because

A game includes