Question 1

Backward induction involves:

Accepted Answer

A)  a process of analyzing a problem in reverse.
B)  thinking forward and working backward.
C)  starting with the last choice and working backward to determine an optimal strategy.
D)  All of these statements are true.E) A) and C)
F) B) and D)

Question 2

In repeated games:

Accepted Answer

A)  a cooperative outcome is more likely than in a single game.
B)  a noncooperative outcome is more likely than in a single game.
C)  cooperation never happens.
D)  players always cooperate and enjoy a mutually beneficial equilibrium.E) B) and D)
F) B) and C)

Question 3

The prisoner's dilemma is a game of strategy:

Accepted Answer

A)  in which people make rational choices that lead to a less-than-ideal result for all.
B)  in which people make rational choices that lead to the ideal result for all.
C)  that leads everyone to be as well off as possible without making another worse off.
D)  that leads people to make irrational choices that lead to the ideal result for all.E) None of the above
F) C) and D)

Question 4

A game with a first-mover advantage is one in which:

Accepted Answer

A)  the player who chooses first gets a higher payoff than those who follow.
B)  the player who chooses first gets to decide if a repeated game will start with cooperation from the beginning.
C)  the first player to move determines the payoffs for the rest of the game.
D)  None of these statements is true.E) A) and B)
F) A) and C)

Question 5

All games involve which of the following?

Accepted Answer

A)  Rules
B)  Strategies
C)  Payoffs
D)  All games involve all of these things.E) B) and C)
F) A) and D)

Question 6

In the prisoner's dilemma game:

Accepted Answer

A)  a negative-negative outcome can be predicted.
B)  a dominant strategy exists for both players.
C)  a noncooperative equilibrium can be predicted.
D)  All of these statements are true.E) C) and D)
F) None of the above

Question 7

A key to gaining cooperative behavior in a repeated game is:

Accepted Answer

A)  it must be repeated indefinitely.
B)  there must be a definitive end to the game.
C)  the players must commit to always acting in their own self-interest.
D)  at least one player must have a dominant strategy.E) B) and D)
F) All of the above

Question 8

Games with a negative-negative outcome:

Accepted Answer

A)  must have a noncooperative equilibrium.
B)  are not necessarily the best outcome for the players involved.
C)  result from players acting in their own self-interest.
D)  All of these statements are true.E) A) and C)
F) B) and D)

Question 9

Collusion:

Accepted Answer

A)  occurs only when no dominant strategy is present.
B)  can occur when dominant strategies are present for both players.
C)  is observed,but economists cannot theoretically model it.
D)  is a theoretical concept that is rarely observed.E) A) and C)
F) All of the above

Question 10

A way to summarize the actions and payoffs of a sequential game is to use a:

Accepted Answer

A)  decision matrix.
B)  decision tree.
C)  payoff tree.
D)  flowchart.E) B) and D)
F) A) and B)

Question 11

Collusion is when businesses:

Accepted Answer

A)  agree to cooperate,and their behavior does not serve public interest.
B)  agree to cooperate,and the U.S.government works hard to encourage this behavior.
C)  have noncooperative outcomes,because they compete outside the public eye.
D)  act in their own self-interest and ignore what the other businesses are doing.E) B) and D)
F) A) and B)

Question 12

In games,rules:

Accepted Answer

A)  define the actions that are allowed in a game.
B)  need to be loosely adhered to in order to predict an outcome.
C)  define the winners of a game.
D)  outline the wrong choices that could be made in a game.E) A) and C)
F) A) and B)

Question 13

Games with a noncooperative equilibrium:

Accepted Answer

A)  always result in a negative-negative outcome.
B)  always result in a positive-positive outcome.
C)  can result in either a positive-positive or negative-negative outcome.
D)  always result in a positive-negative outcome (zero-sum) .E) B) and C)
F) C) and D)

Question 14

A dominant strategy is one:

Accepted Answer

A)  that is the best one to follow,no matter what strategy other players choose.
B)  in which a player is forced to choose given the rules of the game.
C)  in which a player must choose,even though it does not optimize his outcome.
D)  that is best to follow only for certain strategy choices of rivals.E) B) and D)
F) A) and B)

Question 15

Games:

Accepted Answer

A)  only have one possible stable outcome.
B)  may have noncooperative equilibriums that are positive-positive outcomes.
C)  must have a dominant strategy present in order to reach an equilibrium.
D)  None of these statements is true.E) B) and C)
F) A) and D)

Question 16

For a commitment strategy to work:

Accepted Answer

A)  the punishment must be so bad that it outweighs the incentive to defect in the game.
B)  the punishment must be immediately after the game is played.
C)  both players must agree to a punishment.
D)  no player may have a dominant strategy.E) A) and B)
F) A) and C)

Question 17

In games,strategies are:

Accepted Answer

A)  the plans of action that players follow to achieve their goals.
B)  the different sets of actions that players could follow during a game.
C)  the same for everyone to achieve the same goal.
D)  All of these statements are true.E) All of the above
F) None of the above

Question 18

Cooperative equilibriums:

Accepted Answer

A)  are impossible to reach in real life.
B)  never occur unless players act in their own self-interest.
C)  None of these statements is true.
D)  never result in positive-positive outcomes.E) A) and B)
F) None of the above

Question 19

To economists,games are:

Accepted Answer

A)  any situation in which players pursue strategies designed to achieve their goals.
B)  a trivial pursuit,and should not be used to analyze the economy or its actors.
C)  a way to simplify and minimize the true importance of situations like war.
D)  All of these statements are true.E) C) and D)
F) A) and D)

Question 20

A commitment strategy is an agreement in which players agree to:

Accepted Answer

A)  submit to a penalty in the future if they defect from a given strategy.
B)  cooperate before the game begins.
C)  cooperate in repeated games until someone defects.
D)  None of these is a definition of a commitment strategy.E) C) and D)
F) A) and D)

Exam 9: Game Theory and Strategic Thinking

A key to gaining cooperative behavior in a repeated game is:

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Games with a noncooperative equilibrium:

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Games with a negative-negative outcome:

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In games,strategies are:

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In the prisoner's dilemma game:

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For a commitment strategy to work:

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In repeated games:

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A commitment strategy is an agreement in which players agree to:

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Collusion:

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All games involve which of the following?

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Backward induction involves:

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A way to summarize the actions and payoffs of a sequential game is to use a:

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Collusion is when businesses:

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In games,rules:

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Cooperative equilibriums:

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Games:

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A game with a first-mover advantage is one in which:

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The prisoner's dilemma is a game of strategy:

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To economists,games are:

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A dominant strategy is one:

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