game%20theory%20-%20ch14

game%20theory%20-%20ch14 - ECO303: Intermediate...

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ECO303: Intermediate Microeconomic Theory (Balak, Spring 2008 Page 1 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 self-interest of individual players is called a “prisoner's dilemma”. II. The Cournot and Bertrand models are examples of “prisoner's dilemma” games. A) Both I and II are true. C) I is true; II is false. B) Both I and II are false. D) I is false; II is true. 4. A dominant strategy A) is a strong strategy. B) guarantees a Nash equilibrium. C) is a strategy that is better for a player than any other the player might choose, regardless of the other player's strategy. D) depends on the other player's 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, A) players move sequentially. B) a player chooses among two or more pure strategies according to pre-specified probabilities. C) the players may never reach a Nash equilibrium. D) players obtain lower payoffs than in a pure strategy equilibrium.
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Page 2 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. 8. Consider a repeated prisoner's dilemma game. The likelihood of a cooperative outcome rises when A) they value payoffs in future periods much less than they value payoffs in the current period. B)
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This note was uploaded on 01/17/2009 for the course ECONOMICS ECON2101 taught by Professor Stevenxu during the Spring '09 term at HKU.

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game%20theory%20-%20ch14 - ECO303: Intermediate...

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