Question 1

Bargaining does NOT normally occur in

Accepted Answer

A) vertical business relationships. 
B) wages and working conditions under a union contract. 
C) posted price markets. 
D) the legal system. 
A) vertical business relationships. 
B) wages and working conditions under a union contract. 
C) posted price markets. 
D) the legal system.

Question 2

Explain why it is unwise to bid more than your valuation of the good in a sealed bid second-price auction.

Accepted Answer

Assume you have a valuation of the good

Question 3

If a game has a pure strategy Nash equilibrium, then

Accepted Answer

A) it might also have a mixed strategy equilibrium. 
B) it does not have a mixed strategy equilibrium. 
C) at least one player has a dominant strategy. 
D) no player has a dominant strategy. 
A) it might also have a mixed strategy equilibrium. 
B) it does not have a mixed strategy equilibrium. 
C) at least one player has a dominant strategy. 
D) no player has a dominant strategy.

Question 4

Firms in an oligopolistic market ________ because they are ________.

Accepted Answer

A) attempt to predict the behavior of other firms; strategically interdependent 
B) form cartels; unable to predict the behavior of other firms 
C) ignore other firms' actions; strategically independent 
D) advertise; unable to differentiate their products 
A) attempt to predict the behavior of other firms; strategically interdependent 
B) form cartels; unable to predict the behavior of other firms 
C) ignore other firms' actions; strategically independent 
D) advertise; unable to differentiate their products

Question 5

When neither player has a dominant strategy,

Accepted Answer

A) game theory will not provide information. 
B) no Nash equilibrium exists. 
C) at least one Nash equilibrium exists. 
D) the game cannot be analyzed. 
A) game theory will not provide information. 
B) no Nash equilibrium exists. 
C) at least one Nash equilibrium exists. 
D) the game cannot be analyzed.

Question 6

If neither firm has a dominant strategy, a Nash equilibrium cannot exist.

Accepted Answer

A) True 
 B)False

Question 7

Dominant strategies

Accepted Answer

A) are always present in simultaneous games. 
B) result in a prisoners' dilemma. 
C) result in one firm winning and the other losing. 
D) None of the above. 
A) are always present in simultaneous games. 
B) result in a prisoners' dilemma. 
C) result in one firm winning and the other losing. 
D) None of the above.

Question 8

"Cheap talk" is considered cheap because

Accepted Answer

A) communications via phone or email these days has a cost that is close to zero. 
B) a firm can say anything, but may actually do something different. 
C) the cost of talking is far outweighed by the gains to be made in coordinating efforts. 
D) firms avoid the costs of hiring lawyers. 
A) communications via phone or email these days has a cost that is close to zero. 
B) a firm can say anything, but may actually do something different. 
C) the cost of talking is far outweighed by the gains to be made in coordinating efforts. 
D) firms avoid the costs of hiring lawyers.

Question 9

One interesting feature of a prisoner's dilemma game is that

Accepted Answer

A) non-cooperative behavior leads to lower payoffs than cooperative behavior. 
B) there is never a dominated strategy. 
C) individuals behave irrationally when they behave non-cooperatively. 
D) cooperative behavior leads to lower payoffs than non-cooperative behavior. 
A) non-cooperative behavior leads to lower payoffs than cooperative behavior. 
B) there is never a dominated strategy. 
C) individuals behave irrationally when they behave non-cooperatively. 
D) cooperative behavior leads to lower payoffs than non-cooperative behavior.

Question 10

-The above figure shows a payoff matrix for two firms, A and B, that must choose between selling basic computers or advanced computers. Firm B's dominant strategy

Accepted Answer

A) is to make basic computers. 
B) is to make advanced computers. 
C) is to adopt firm A's strategy. 
D) does not exist in this game. 
A) is to make basic computers. 
B) is to make advanced computers. 
C) is to adopt firm A's strategy. 
D) does not exist in this game.

Question 11

Common knowledge in game theory

Accepted Answer

A) is information known by all players. 
B) is required for static games. 
C) does not impact the outcome of the game, since everyone has the information. 
D) Both A and B. 
A) is information known by all players. 
B) is required for static games. 
C) does not impact the outcome of the game, since everyone has the information. 
D) Both A and B.

Question 12

A strategy in which a player uses probabilities to decide which strategy to use is called a

Accepted Answer

A) pure strategy. 
B) mixed strategy. 
C) Pareto strategy. 
D) coin flip strategy. 
A) pure strategy. 
B) mixed strategy. 
C) Pareto strategy. 
D) coin flip strategy.

Question 13

In the above table, if the players use a maximin strategy,

Accepted Answer

A) the equilibrium is for both firms to produce. 
B) the equilibrium choice is the same as using a regular, best response strategy. 
C) the equilibrium is for A to produce and B not to produce. 
D) the equilibrium is for B to produce and A not to produce. 
A) the equilibrium is for both firms to produce. 
B) the equilibrium choice is the same as using a regular, best response strategy. 
C) the equilibrium is for A to produce and B not to produce. 
D) the equilibrium is for B to produce and A not to produce.

Question 14

If a firm does NOT know its rival's profit function, then we consider that information to be

Accepted Answer

A) irrelevant in deciding its best strategy. 
B) private. 
C) common knowledge. 
D) Pareto sub-optimal. 
A) irrelevant in deciding its best strategy. 
B) private. 
C) common knowledge. 
D) Pareto sub-optimal.

Question 15

-The above figure shows a payoff matrix for two firms, A and B, that must choose between selling basic computers or advanced computers. Which of the following is a Nash equilibrium?

Accepted Answer

A) Both firms make advanced computers. 
B) Both firms make basic computers. 
C) Firm A makes basic computers and firm B makes advanced computers. 
D) There are no Nash equilibria. 
A) Both firms make advanced computers. 
B) Both firms make basic computers. 
C) Firm A makes basic computers and firm B makes advanced computers. 
D) There are no Nash equilibria.

Question 16

In the reality TV show Storage Wars, people bid on the contents of repossessed storage units without being able to evaluate the contents. This is an example of a ________ auction.

Accepted Answer

A) common value 
B) private value 
C) Dutch 
D) second-price 
A) common value 
B) private value 
C) Dutch 
D) second-price

Question 17

A private auction is an auction in which

Accepted Answer

A) individuals know their own value of the good and everyone else's valuation, too. 
B) individuals have their own valuation of the good but don't know everyone else's. 
C) many auctions are auctioned off at the same time. 
D) only one good is auctioned off. 
A) individuals know their own value of the good and everyone else's valuation, too. 
B) individuals have their own valuation of the good but don't know everyone else's. 
C) many auctions are auctioned off at the same time. 
D) only one good is auctioned off.

Question 18

-The above figure shows the payoff to two airlines, A and B, of serving a particular route. If the two airlines must decide simultaneously, which one of the following statements is TRUE?

Accepted Answer

A) Since firm B has no dominant strategy, its decision is unpredictable. 
B) Since firm B's decision is unpredictable, firm A's decision is unpredictable. 
C) Neither firm entering is a Nash equilibrium. 
D) Firm B will not enter because it knows firm A will. 
A) Since firm B has no dominant strategy, its decision is unpredictable. 
B) Since firm B's decision is unpredictable, firm A's decision is unpredictable. 
C) Neither firm entering is a Nash equilibrium. 
D) Firm B will not enter because it knows firm A will.

Question 19

An auction in which the price announced by the auctioneer DESCENDS is called a(n)

Accepted Answer

A) Dutch Auction. 
B) English Auction. 
C) Sealed Bid Auction. 
D) Descending Option Auction. 
A) Dutch Auction. 
B) English Auction. 
C) Sealed Bid Auction. 
D) Descending Option Auction.

Question 20

Mutually Assured Destruction was a standing policy during the Cold War, in which the United States and the USSR maintained and expanded nuclear arsenals beyond practical levels. What could explain such a phenomenon?

Accepted Answer

A) Insane public officials who were bent on world domination. 
B) A prisoner's dilemma. 
C) A leader-follower type game. 
D) Tacit collusion. 
A) Insane public officials who were bent on world domination. 
B) A prisoner's dilemma. 
C) A leader-follower type game. 
D) Tacit collusion.

Bargaining does NOT normally occur in

Explain why it is unwise to bid more than your valuation of the good in a sealed bid second-price auction.

If a game has a pure strategy Nash equilibrium, then

Firms in an oligopolistic market because they are .

When neither player has a dominant strategy,

If neither firm has a dominant strategy, a Nash equilibrium cannot exist.

Dominant strategies

"Cheap talk" is considered cheap because

One interesting feature of a prisoner's dilemma game is that

-The above figure shows a payoff matrix for two firms, A and B, that must choose between selling basic computers or advanced computers. Firm B's dominant strategy

Common knowledge in game theory

A strategy in which a player uses probabilities to decide which strategy to use is called a

In the above table, if the players use a maximin strategy,

If a firm does NOT know its rival's profit function, then we consider that information to be

-The above figure shows a payoff matrix for two firms, A and B, that must choose between selling basic computers or advanced computers. Which of the following is a Nash equilibrium?

In the reality TV show Storage Wars, people bid on the contents of repossessed storage units without being able to evaluate the contents. This is an example of a ________ auction.

A private auction is an auction in which

-The above figure shows the payoff to two airlines, A and B, of serving a particular route. If the two airlines must decide simultaneously, which one of the following statements is TRUE?

An auction in which the price announced by the auctioneer DESCENDS is called a(n)

Mutually Assured Destruction was a standing policy during the Cold War, in which the United States and the USSR maintained and expanded nuclear arsenals beyond practical levels. What could explain such a phenomenon?

Introduction

Supply and Demand

Empirical Methods for Demand Analysis

Consumer Choice

Production

Costs

Firm Organization and Market Structure

Competitive Firms and Markets

Monopoly

Pricing With Market Power

Oligopoly and Monopolistic Competition

Strategies Over Time

Managerial Decision-Making Under Uncertainty

Asymmetric Information

Government and Business

Global Business

Filters

Exam 12: Game Theory and Business Strategy

Bargaining does NOT normally occur in

Explain why it is unwise to bid more than your valuation of the good in a sealed bid second-price auction.

If a game has a pure strategy Nash equilibrium, then

Firms in an oligopolistic market ________ because they are ________.

When neither player has a dominant strategy,

If neither firm has a dominant strategy, a Nash equilibrium cannot exist.

Dominant strategies

"Cheap talk" is considered cheap because

One interesting feature of a prisoner's dilemma game is that

-The above figure shows a payoff matrix for two firms, A and B, that must choose between selling basic computers or advanced computers. Firm B's dominant strategy

Common knowledge in game theory

A strategy in which a player uses probabilities to decide which strategy to use is called a

In the above table, if the players use a maximin strategy,

If a firm does NOT know its rival's profit function, then we consider that information to be

-The above figure shows a payoff matrix for two firms, A and B, that must choose between selling basic computers or advanced computers. Which of the following is a Nash equilibrium?

In the reality TV show Storage Wars, people bid on the contents of repossessed storage units without being able to evaluate the contents. This is an example of a ________ auction.

A private auction is an auction in which

-The above figure shows the payoff to two airlines, A and B, of serving a particular route. If the two airlines must decide simultaneously, which one of the following statements is TRUE?

An auction in which the price announced by the auctioneer DESCENDS is called a(n)

Mutually Assured Destruction was a standing policy during the Cold War, in which the United States and the USSR maintained and expanded nuclear arsenals beyond practical levels. What could explain such a phenomenon?

Introduction

Supply and Demand

Empirical Methods for Demand Analysis

Consumer Choice

Production

Costs

Firm Organization and Market Structure

Competitive Firms and Markets

Monopoly

Pricing With Market Power

Oligopoly and Monopolistic Competition

Strategies Over Time

Managerial Decision-Making Under Uncertainty

Asymmetric Information

Government and Business

Global Business

Filters

Firms in an oligopolistic market because they are .