Ch. 14 Sapling ECON

Which of the following statements must be true in a game theory situation that results in a prisoners' dilemma? Neither player has a dominant strategy in the game. Neither player has an incentive to deviate unilaterally from the prisoners' dilemma outcome. Both players could achieve a better outcome if they successfully collude.

2 and 3,: Neither player has an incentive to deviate unilaterally from the prisoners' dilemma outcome. Both players could achieve a better outcome if they successfully collude.

Carlise and Mary are the only two editors of mystery novels in the city of Readville. If Carlise and Mary collude to earn more profits, they would: a each reduce the number of books published and raise prices. b each increase the number of books published and lower prices. c each increase the number of books published and raise prices. d each reduce the number of books published and lower prices.

A. each reduce the number of books published and raise prices.

Which of the following is not an essential component of game theory? Payoffs Money Strategies Players

Money

Which of the following conditions makes a cartel difficult to maintain over time? a. Having very few members of a cartel b.Having government support for the cartel c. Every firm having a different cost structure d. Selling a product that can be easily measured and verified other members.

c. Every firm having a different cost structure

Suppose that Rich and Sheri each own the two largest helicopter tour companies at the Grand Canyon. If each uses a pricing strategy that leads to a prisoner's dilemma, what would be the result? Rich and Sheri would be better off by not cooperating with each other. Tourists would end up paying a lot more for helicopter tours. Both Rich and Sheri would earn higher profits. Tourists would end up receiving great deals on helicopter tours.

d Because: Because they both follow strategy that leads to prisoners delimma so they will not form a cartel as result lower prices will be charged from tourists

Strategies for players to overcome a prisoner's dilemma include: a competing more rigorously to achieve a better outcome. b avoiding collusion, which hurts all players involved. c playing the strategies that lead to a Nash equilibrium. d playing the game repeatedly over time to promote cooperation.

d. Playing the game repeatedly overtime to promote cooperation.

What must be true about a game theory outcome for it to be considered a prisoners' dilemma? a) There must be more than one Nash equilibrium in the game. b) The outcome cannot be a Nash equilibrium. c) The payoffs must be the worst outcome for both players. d) There must be a different outcome that provides a higher payoff for both players.

d. there must be a different outcome that provides a higher payoff for both players.