ECO303: Intermediate Microeconomic Theory (Balak, Spring 2008
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Game Theory (ch 14)
1. Game theory refers to
A)
a plan for the actions that a player in a game will take under every conceivable circumstance that
the player might face.
B)
a situation in which each player chooses the strategy that yields the highest payoff, given the
strategy chosen by the other players.
C)
optimal decision making by microeconomic agents.
D)
the branch of microeconomics concerned with the analysis of optimal decision making in
competitive situations.
2. Which of the following statements is incorrect?
A)
A Nash equilibrium is a situation in which each player chooses their best strategy given the
strategies chosen by the other players in the game.
B)
A Cournot equilibrium is an example of a Nash equilibrium.
C)
A Bertrand equilibrium is an example of a Nash equilibrium.
D)
A Nash Equilibrium maximizes the aggregate payoffs of the players of the game.
3. Evaluate the truthfulness of the following statements
I.
A game situation in which there is a tension between the collective interest of all of the players and
the selfinterest of individual players is called a “prisoner's dilemma”.
II.
The Cournot and Bertrand models are examples of “prisoner's dilemma” games.
4. A dominant strategy
5. Player A has a dominated strategy
A)
when Player A has a dominant strategy.
B)
in a game of chicken
C)
when Player A has another strategy that gives a higher payoff regardless of what Player B does.
D)
when there are less than three players per game.
6. Under a mixed strategy,
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7. Player A and Player B are playing a prisoners' dilemma game.
Which of the following statements is
false?
A)
If the players play the game repeatedly with each other, the players may play cooperatively.
B)
If the game is played only once, the players would not be expected to cooperate.
C)
If players play the game repeatedly with each other, they are more likely to cooperate if they are
patient.
D)
If the game is played only once, the outcome minimizes total jail time.
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 Spring '09
 StevenXu
 Game Theory, player, Nash

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