EC 201 - Exam #3 - Chapter 18

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

backward reasoning.

A simultaneous game is one in which:

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

A Grim Trigger strategy is to:

punish rivals who do not cooperate.

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.

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

Assume that others will defer to your action.

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

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

what are the 4 steps for making good strategic decisions?

Play your best response. Consider all the possible outcomes. Think about the "what ifs" separately.

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

What problem arises in coordination games with multiple equilibria?

It is difficult to achieve the commonly desired outcome.

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.

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

a finitely repeated

what is a payoff matrix?

a table showing the potential outcomes arising from the choices made by decision makers

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

communication. focal points, culture, and norms. laws and regulations.

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.

Game theory is :

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