PrQ 18: Game theory and Strategic Choices

Use the table, with data for Tasha and Hui Er, to answer the question. Use the check mark method to determine which cell contains a Nash equilibrium. Under a Nash equilibrium, Hui Er earns profits of _____, and Tasha earns profits of _____.

$3,000; $3,000

Use the table with data for Bella and Martin to answer the question. With no cooperation, the Nash equilibrium yields Bella a profit of _____ and Martin a profit of _____.

$4,000; $3,500

Use the table with data for Maria and Jose to answer the question. If Jose charges $8, Maria should charge _____. If Jose charges $4, Maria should charge _____.

$4; $4

Once an original decision has been made, what happens on a game tree with each additional decision made by a player?

A new branch is formed.

A simultaneous game is one in which:

each player must choose without knowing the other player's choice.

What problem arises in coordination games with multiple equilibria?

It is difficult to achieve the commonly desired outcome.

When players in a game collude, they:

make agreements not to compete with each other and, typically, to charge high prices.

A basic logic that applies to all strategic interactions is:

making a good choice requires that you anticipate what others will do.

When resources are shared or owned in common, the Nash equilibrium leads to:

overuse of resources.

A Grim Trigger strategy is to:

punish rivals who do not cooperate.

Which of the following is NOT one of the four steps for making good strategic decisions?

Assume that others will defer to your action.

Use the table with data for Gizelle and Devin to answer the question. Devin tries to put himself in Gizelle's place. He concludes that if he (Devin) charges $8, then Gizelle will charge _____ to earn a profit of _____.

$7; $6,000

Which of the following statements regarding a Nash equilibrium is TRUE?

No player can do better by unilaterally changing his or her choice.

A Nash equilibrium can be identified on a payoff table when:

a check mark is put next to each player's best response, and there is a cell with a check mark for each player.

Game theory is:

the science of making good decisions in situations involving strategic interactions.

When a player faces the same strategic interaction a fixed number of times, the player is engaged in _____ game.

a finitely repeated

Use the table about Hikaru and his parents to answer the question. What is this kind of table called?

a payoff table

When using coordination games to look at the issue of bank runs, the best outcome occurs when:

all people keep their money in the bank.

When a player's best response is to take a different (but complementary) action to the other player, then both participants are playing _____ game.

an anti-coordination

Coordination problems can be solved through each of the following approaches EXCEPT:

backward reasoning.