Final exam econ 115 practice.pdf

# 37 the standard assumption of self interest implies

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37. The standard assumption of self-interest implies that in the dictator games with \$10 endowment, the dictator should share (A) \$0; (B) \$2; (C) \$5; (D) \$10. 38. The empirical evidence in the dictator games shows that it is most common for ‘dictators’ to share (A) between 10% to 30% of their endowments; (B) between 40% and 60% of their endowments; (C) nothing with the recipients; (D) their entire endowments. 39. Neuroeconomics attributes trust to (A) high levels of the oxytocin hormone; (B) overconfidence; (C) the two distinct systems (spontaneous System 1 and calculating System 2) of decision making; (D) risk aversion 40. Consider two agents, Alice and Bob, who have utility functions UA(xA, xB) = 0.3xB + 0.7xA if xA ≥ xB xA if xB > xA UB(xA, xB) = 0.6xA + 0.4xB if xB ≥ xA −0.3xA + 1.3xB if xA > xB where xA and xB are the prizes obtained by Alice and Bob respectively. Then Alice and Bob (A) comply with the standard economic model of self-interest; (B) are not selfish; (C) exhibit context effects; (D) are both spiteful 41. If Alice is the dictator in the dictator game with a \$10 endowment, then she will offer Bob (A) \$0; (B) \$5; (C) \$2; (D) \$10. 42. If Bob is the dictator in the dictator game with a \$10 endowment, then he will offer Alice (A) \$0; (B) \$5; (C) \$2; (D) \$10. 43. In the ultimatum game with a \$10 endowment, Alice will reject the following offers (A) \$1; (B) \$2; (C) \$3; (D) none of the above.

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44. Which of the following concepts of equilibrium in game theory always exists under the assumption of expected utility maximization? (A) dominant strategy equilibrium; (B) iterated dominant strategy equilibrium ; (C) Nash equilibrium in mixed strategies; (D) Nash equilibrium in pure strategies. 45. Consider a game where each of two airlines can choose either low or high fares. Their payoffs are F irm2 F irm2 High Low F irm1, High 5M, 5M 0M, 4M F irm1, Low 4M, 0M 2M, 2M This game has (A) a dominant strategy equilibrium; (B) an iterated dominant strategy equilibrium; (C) two Nash equilibria in pure strategies ; (D) none of the above 46. Behavioral evidence suggests that the likelihood of both firms choosing high prices can be increased if their executives can (A) engage in informal communications and signal their intention to keep high prices; (B) play mixed strategies; (C) use the K-level thinking; (D) none of the above. 47. Consider three bidders who have private values that are independently and uniformly distributed between 0 and 100. Suppose that these values happen to be v1 = 30, v2 = 90, and v3 = 10. Then the equilibrium price in the second-price auction is (A) 20; (B) 30; (C) 60; (D) 90. 48. (continued) The equilibrium price in the first-price auction is (A) 20; (B) 30; (C) 60; (D) 90. 49. The equilibria in these auctions (A) satisfy Pareto efficiency; (B) have no Winner’s Curse; (C) satisfy revenue equivalence principle; (D) all of the above. 50. In experiments, Winner’s Curse is most likely to hold for (A) the English auction with private values; (B) the Dutch auction with private values; (C) the second-price auction with private values; (D) the first-price auction with common values.
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