Question 1

A Nash equilibrium refers to a:

Accepted Answer

A) cooperative game. 
B) a sequential game. 
C) a repeated game. 
D) a noncooperative game. 
A) cooperative game. 
B) a sequential game. 
C) a repeated game. 
D) a noncooperative game.

Question 2

A screening question is structured to:

Accepted Answer

A) screen unqualified applicants for a job. 
B) extract information from prisoners. 
C) alter a respondent's behavior. 
D) reveal strategic information about the person who answers. 
A) screen unqualified applicants for a job. 
B) extract information from prisoners. 
C) alter a respondent's behavior. 
D) reveal strategic information about the person who answers.

Question 3

In a standard sealed-bid auction, the person who bids the:

Accepted Answer

A) highest gets the object of the bid. 
B) second highest gets the good and pays that price. 
C) second highest has the option to receive the good if she pays the price of the highest bidder. 
D) highest gets the object but pays the price bid by the second highest bidder. 
A) highest gets the object of the bid. 
B) second highest gets the good and pays that price. 
C) second highest has the option to receive the good if she pays the price of the highest bidder. 
D) highest gets the object but pays the price bid by the second highest bidder.

Question 4

In standard game theory, cheap talk:

Accepted Answer

A) will fool all the players into cooperating. 
B) doesn't affect the outcome of the game. 
C) benefits only trustworthy people. 
D) changes the payoffs. 
A) will fool all the players into cooperating. 
B) doesn't affect the outcome of the game. 
C) benefits only trustworthy people. 
D) changes the payoffs.

Question 5

Game theory is designed to study situations in which each agent's decisions are:

Accepted Answer

A) interdependent. 
B) independent. 
C) constrained. 
D) uninformed. 
A) interdependent. 
B) independent. 
C) constrained. 
D) uninformed.

Question 6

A mixed strategy means a player:

Accepted Answer

A) makes random moves in a sequential game. 
B) makes random moves in a simultaneous game. 
C) mixes random moves with nonrandom moves. 
D) mixes optimal and suboptimal moves to confuse her opponent. 
A) makes random moves in a sequential game. 
B) makes random moves in a simultaneous game. 
C) mixes random moves with nonrandom moves. 
D) mixes optimal and suboptimal moves to confuse her opponent.

Question 7

When suspects are interviewed in different rooms, they do not know what the other suspects are going to do and hence seek the best deal for themselves. This illustrates:

Accepted Answer

A) that criminals are irrational. 
B) the idea of a cooperative game. 
C) the idea of a noncooperative game. 
D) that the police are not taking into account the suspects' rights. 
A) that criminals are irrational. 
B) the idea of a cooperative game. 
C) the idea of a noncooperative game. 
D) that the police are not taking into account the suspects' rights.

Question 8

The National Hockey League locked out the hockey players in an effort to negotiate a salary cap with the players' union. A cap would limit the payroll of each team. League officials acknowledged that the teams have brought the problem on themselves by overspending and overpaying some players in an effort to compete for the best players. Why would the teams have caused this problem for themselves?

Accepted Answer

A) They used explicit collusion instead of implicit collusion. 
B) They tried to create a contestable market and now suffer because there are no barriers to entry. 
C) They were caught in the logic of the prisoner's dilemma in which each player maximizing his own self-interest leads to an outcome that is worse off for everyone. 
D) They tried to create a cartel and suffered the consequences of too much collusion. 
A) They used explicit collusion instead of implicit collusion. 
B) They tried to create a contestable market and now suffer because there are no barriers to entry. 
C) They were caught in the logic of the prisoner's dilemma in which each player maximizing his own self-interest leads to an outcome that is worse off for everyone. 
D) They tried to create a cartel and suffered the consequences of too much collusion.

Question 9

What is a Nash equilibrium?

Accepted Answer

A Nash equilibrium is a set of strategie

Question 10

A simultaneous game is one in which:

Accepted Answer

A) players act together to achieve a common goal. 
B) players take turns making moves and/or decisions. 
C) players make their moves and/or decisions at the same time. 
D) there is never a winner if players act rationally. 
A) players act together to achieve a common goal. 
B) players take turns making moves and/or decisions. 
C) players make their moves and/or decisions at the same time. 
D) there is never a winner if players act rationally.

Question 11

The potential for return to cooperation is greatest in:

Accepted Answer

A) zero sum games. 
B) repeated games. 
C) sequential games. 
D) simultaneous move games. 
A) zero sum games. 
B) repeated games. 
C) sequential games. 
D) simultaneous move games.

Question 12

Why is game theory useful to economists?

Accepted Answer

Game theory is a highly flexible tool th

Question 13

The prisoner's dilemma is a theoretical tool with little in the way of practical applications.

Accepted Answer

A) True 
 B)False

Question 14

Taking explicit account of a rival's expected response to a decision you are making is called:

Accepted Answer

A) economic decision making. 
B) monopolistic decision making. 
C) strategic decision making. 
D) competitive decision making. 
A) economic decision making. 
B) monopolistic decision making. 
C) strategic decision making. 
D) competitive decision making.

Question 15

A Nash equilibrium is the:

Accepted Answer

A) payoff that maximizes the joint payoff. 
B) output level that minimizes average total cost. 
C) strategy that maximizes the outcome of all the players. 
D) set of strategies such that no player can improve his or her position by changing his or her own action. 
A) payoff that maximizes the joint payoff. 
B) output level that minimizes average total cost. 
C) strategy that maximizes the outcome of all the players. 
D) set of strategies such that no player can improve his or her position by changing his or her own action.

Question 16

A strategy that is preferred by an individual regardless of an opponent's decision is called a:

Accepted Answer

A) Nash equilibrium. 
B) Vickrey position. 
C) framing strategy. 
D) dominant strategy. 
A) Nash equilibrium. 
B) Vickrey position. 
C) framing strategy. 
D) dominant strategy.

Question 17

What is the link between behavioral economics and formal game theory?

Accepted Answer

Behavioral economics examines

Question 18

A set of strategies in which no player can improve his or her payoff by changing his or her own action is called a:

Accepted Answer

A) Nash equilibrium. 
B) Vickrey position. 
C) framing strategy. 
D) dominant strategy. 
A) Nash equilibrium. 
B) Vickrey position. 
C) framing strategy. 
D) dominant strategy.

Question 19

The fact that airlines offer off-peak airline discounts rather than peak-time surcharges is an example of:

Accepted Answer

A) the endowment effect. 
B) framing effects. 
C) non-zero sum game. 
D) irrational behavior. 
A) the endowment effect. 
B) framing effects. 
C) non-zero sum game. 
D) irrational behavior.

Question 20

In the two-thirds game,what is the Nash equilibrium? Why would choosing the optimal strategy normally cause one to lose?

Accepted Answer

The optimal rollback strategy

Exam 20: Game Theory, Strategic Decision Making, and Behavioral Economics

A Nash equilibrium refers to a:

A screening question is structured to:

In a standard sealed-bid auction, the person who bids the:

In standard game theory, cheap talk:

Game theory is designed to study situations in which each agent's decisions are:

A mixed strategy means a player:

When suspects are interviewed in different rooms, they do not know what the other suspects are going to do and hence seek the best deal for themselves. This illustrates:

What is a Nash equilibrium?

A simultaneous game is one in which:

The potential for return to cooperation is greatest in:

Why is game theory useful to economists?

The prisoner's dilemma is a theoretical tool with little in the way of practical applications.

Taking explicit account of a rival's expected response to a decision you are making is called:

A Nash equilibrium is the:

A strategy that is preferred by an individual regardless of an opponent's decision is called a:

What is the link between behavioral economics and formal game theory?

A set of strategies in which no player can improve his or her payoff by changing his or her own action is called a:

The fact that airlines offer off-peak airline discounts rather than peak-time surcharges is an example of:

In the two-thirds game,what is the Nash equilibrium? Why would choosing the optimal strategy normally cause one to lose?

Economics and Economic Reasoning

The Production Possibility Model, Trade, and Globalization

Economic Institutions

Supply and Demand

Using Supply and Demand

Describing Supply and Demand: Elasticities

Taxation and Government Intervention

Market Failure Versus Government Failure

Comparative Advantage, Exchange Rates, and Globalization

International Trade Policy

Production and Cost Analysis I

Production and Cost Analysis II

Perfect Competition

Monopoly and Monopolistic Competition

Oligopoly and Antitrust Policy

Real-World Competition and Technology

Work and the Labor Market

Who Gets What the Distribution of Income

The Logic of Individual Choice: the Foundation of Supply and Demand

Thinking Like a Modern Economist

Behavioral Economics and Modern Economic Policy

Microeconomic Policy, Economic Reasoning, and Beyond

Economic Growth, Business Cycles, and Unemployment

Measuring and Describing the Aggregate Economy

The Keynesian Short-Run Policy Model: Demand-Side Policies

The Classical Long-Run Policy Model: Growth and Supply-Side Policies

The Financial Sector and the Economy

Monetary Policy

Financial Crises, Panics, and Unconventional Monetary Policy

Deficits and Debt: the Austerity Debate

The Fiscal Policy Dilemma

Jobs and Unemployment

Inflation, Deflation, and Macro Policy

International Financial Policy

Macro Policy in a Global Setting

Structural Stagnation and Globalization

Macro Policy in Developing Countries

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