Econ Ch. 13
Suppose you were playing rock-paper-scissors as an extensive from game; first you choose rock, or paper, or scissors, and then your opponent makes a choice. Is there a first-mover advantage in this game?
No, if you show your move first you will lose every time.
Is a player's best response in a game the same as his dominant strategy?
Not necessarily. If a player has a dominant strategy, then it is his best response; however, every best response is not always a dominant strategy.
Although there are many examples of game theory in the real world, how well do you think specifics like payoff matrices, Nash equilibrium, and dominant strategies translate to reality? Which of the following are potential reasons game theory differs from reality? (Check all that apply.)
Payoffs are determined by the attitudes and feelings of individuals as well as by their monetary returns. One player may be more cunning, wiser, or more experienced than another.
Why might game theory not always be an accurate predictor of real-world situations?
We do not always know the exact payoffs, since payoffs involve attitudes and feelings as well as monetary gains.
Two firms are thinking of entering a new market. If one enters it will be successful but if a second enters both will suffer very large losses. Is there a first-mover advantage in this game?
Yes. The firm that goes first can enter and the firm that goes second will have no incentive to enter.
In a zero-sum game the players are better off by ________.
choosing a mixed strategy because it enables randomization
In a trust game that is only played once, you would be most inclined to trust someone who ____________.
claims she gains happiness from helping others.
A first-mover advantage occurs if __________.
the first mover to act in a sequential game gets a benefit from doing so.
A dominant strategy equilibrium exists if:
the relevant strategy for each player is a dominant strategy.
One significant difference between extensive-form and simultaneous-move games is:
the timing of moves changes in extensive-form games.
What is the difference between a pure strategy and a mixed strategy?
A pure strategy involves choosing one action, while a mixed strategy involves choosing different actions randomly according to preassigned probabilities.
Which of the following is not an example of a zero-sum game? (Check all that apply.)
A trade agreement that increases gains for both of the nations involved. A brutal and terrible war between two nations that significantly impaired civil life.
Suppose there is a new website called Badtipper.com, where restaurant servers post pictures of bad tippers along with scathing commentary. Knowledge of this website is most likely to change the behavior of individuals with a ____________.
low degree of social preferences.