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ECONOMICS 242 SECOND MIDTERM SPRING 2001 PLEDGE:____________________________ NAME:______________________________ Multiple Choice Questions: 3 points each 1. Suppose I promise to give you $150 every year until I go bankrupt. There is a 10% chance every period that I will go bankrupt. The present value of this promise, given a 7% discount rate is: a. $2142 b. $794 c. $255 d. $178 2. A promise: a. Is always credible. b. Always involves the promisor (person making the promise) taking an action that she would have taken anyway. c. Is conditioned on the action that the promisee (the person receiving the promise) makes. d. Is never credible. 3. “Burning bridges”: a. Is an example of an unconditional strategic move. b. Is an example of a conditional strategic move. c. Is the same thing as an “automatic fulfillment” device. d. Generally causes the player burning the bridge to lose credibility. 4. Third degree path dependence is when we make a decision that was: a. The right decision. b. Trivial. c. The wrong decision, and is costly to change, so we don’t. d. The wrong decision, it is not costly to change, and we don’t change. 5. Pure public goods are: a. Rival and excludable. b. Nonrival and nonexcludable. c. Rival and nonexcludable. d. Nonrival and excludable.
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Consider the following collective action game with N players, two actions (P and S) and payoffs P(n) and S(n), where n is the number of people taking action P. 6. This game fits the classification of:
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This test prep was uploaded on 04/22/2008 for the course ECON 242 taught by Professor Nonnenmacher during the Spring '06 term at Allegheny.

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