Question 1

If decision makers have limited ability to calculate profits from all possible combinations of options, they are said to have

Accepted Answer

A) dementia. 
B) bounded rationality. 
C) Pareto inefficiency. 
D) a maximin problem. 
A) dementia. 
B) bounded rationality. 
C) Pareto inefficiency. 
D) a maximin problem.

Question 2

-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) Only firm A will enter the market. 
B) Only firm B will enter the market. 
C) Neither firm entering is a Nash equilibrium. 
D) The outcome of the game is unpredictable. 
A) Only firm A will enter the market. 
B) Only firm B will enter the market. 
C) Neither firm entering is a Nash equilibrium. 
D) The outcome of the game is unpredictable.

Question 3

A sale in which property or a service is sold to the highest bidder is called a(n)

Accepted Answer

A) auction. 
B) bidder sale. 
C) competitive market. 
D) Austrian bundle. 
A) auction. 
B) bidder sale. 
C) competitive market. 
D) Austrian bundle.

Question 4

Cheap talk

Accepted Answer

A) is never credible. 
B) is illegal. 
C) generally affects the game's payoffs. 
D) can be credible when both firms have an incentive to be truthful. 
A) is never credible. 
B) is illegal. 
C) generally affects the game's payoffs. 
D) can be credible when both firms have an incentive to be truthful.

Question 5

-The above figure shows the payoff for two firms, A and B, that must each choose to sell either at a high or low price. Determine the dominant strategies for each firm (if any)and the Nash equilibria (if any).

Accepted Answer

For both firms the dominant strategy is

Question 6

A dominant strategy

Accepted Answer

A) maximizes the joint profit of the players in the game. 
B) is the player's best response to all possible strategies of the other player. 
C) cannot exist when there is a Nash equilibrium. 
D) only exists when the game is limited to two players. 
A) maximizes the joint profit of the players in the game. 
B) is the player's best response to all possible strategies of the other player. 
C) cannot exist when there is a Nash equilibrium. 
D) only exists when the game is limited to two players.

Question 7

In a second-price auction, the winner pays

Accepted Answer

A) the second-to-last bid it made. 
B) the average of the top two bids. 
C) the amount bid by the runner-up. 
D) None of the above. 
A) the second-to-last bid it made. 
B) the average of the top two bids. 
C) the amount bid by the runner-up. 
D) None of the above.

Question 8

A disagreement point is

Accepted Answer

A) an item of contention between the two bargaining players. 
B) a way of keeping score in a negotiation. 
C) the point in a negotiation where the players cannot reach an agreement. 
D) the outcome that occurs if there is no agreement in a bargain. 
A) an item of contention between the two bargaining players. 
B) a way of keeping score in a negotiation. 
C) the point in a negotiation where the players cannot reach an agreement. 
D) the outcome that occurs if there is no agreement in a bargain.

Question 9

Common knowledge in game theory

Accepted Answer

A) is information known to be known by all players. 
B) is required for dynamic games. 
C) is complete. 
D) Both A and B. 
A) is information known to be known by all players. 
B) is required for dynamic games. 
C) is complete. 
D) Both A and B.

Question 10

A dominated strategy

Accepted Answer

A) exists when one firm is weaker than another. 
B) only occurs in a mixed strategy scenario. 
C) is one that is never used by a rational actor. 
D) is a characteristic of games with multiple Nash equilibria. 
A) exists when one firm is weaker than another. 
B) only occurs in a mixed strategy scenario. 
C) is one that is never used by a rational actor. 
D) is a characteristic of games with multiple Nash equilibria.

Question 11

-The above figure shows a payoff matrix for two firms, A and B, that must choose between a high-price strategy and a low-price strategy. Both firms setting a high price is NOT a Nash equilibrium because

Accepted Answer

A) setting a high price is the dominant strategy for each firm. 
B) neither firm can improve its payoff by setting a low price given that the other firm is setting a high price. 
C) there is no dominant strategy for either firm. 
D) both firms can improve their payoff by setting a low price given that the other firm is setting a high price. 
A) setting a high price is the dominant strategy for each firm. 
B) neither firm can improve its payoff by setting a low price given that the other firm is setting a high price. 
C) there is no dominant strategy for either firm. 
D) both firms can improve their payoff by setting a low price given that the other firm is setting a high price.

Question 12

What is the primary difference between a mixed strategy and a pure strategy?

Accepted Answer

A) Pure strategies are always dominated strategies. 
B) Mixed strategies call for randomizing over possible actions, pure strategies do not. 
C) Pure strategies are much more common than mixed strategies. 
D) Mixed strategies are not optimal whereas pure strategies are. 
A) Pure strategies are always dominated strategies. 
B) Mixed strategies call for randomizing over possible actions, pure strategies do not. 
C) Pure strategies are much more common than mixed strategies. 
D) Mixed strategies are not optimal whereas pure strategies are.

Question 13

If a game contains private information, then

Accepted Answer

A) the game's outcome is affected. 
B) firms will engage in cheap talk to coordinate their actions. 
C) players will decide not to play the game. 
D) third-party negotiations are necessary to resolve the information gap. 
A) the game's outcome is affected. 
B) firms will engage in cheap talk to coordinate their actions. 
C) players will decide not to play the game. 
D) third-party negotiations are necessary to resolve the information gap.

Question 14

-The above figure shows a payoff matrix for two firms, A and B, that must choose between a high-price strategy and a low-price strategy. The Nash equilibrium in this game

Accepted Answer

A) does not exist. 
B) occurs when both firms set a low price. 
C) occurs when both firms set a high price. 
D) occurs when firm A sets a high price and firm B sets a low price. 
A) does not exist. 
B) occurs when both firms set a low price. 
C) occurs when both firms set a high price. 
D) occurs when firm A sets a high price and firm B sets a low price.

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. How many Nash equilibria are there?

Accepted Answer

A) 0 
B) 1 
C) 2 
D) 4 
A) 0 
B) 1 
C) 2 
D) 4

Question 16

Which of the following statements is TRUE?

Accepted Answer

A) If a game has one or more Nash equilibria, then it's not really a game since the solution is known. 
B) A game can either have a Nash equilibrium or a dominant strategy solution. 
C) If a game has a Nash equilibrium, the game must have a dominant strategy solution. 
D) If a game has a dominant strategy solution, the solution must also be a Nash equilibrium. 
A) If a game has one or more Nash equilibria, then it's not really a game since the solution is known. 
B) A game can either have a Nash equilibrium or a dominant strategy solution. 
C) If a game has a Nash equilibrium, the game must have a dominant strategy solution. 
D) If a game has a dominant strategy solution, the solution must also be a Nash equilibrium.

Question 17

If the managers of your firm have bounded rationality, then

Accepted Answer

A) the firm should fire them and hire more competent managers. 
B) a Nash equilibrium does not exist. 
C) they are limited in their ability to calculate and may not succeed in maximizing profits. 
D) it is not possible to maximize profits. 
A) the firm should fire them and hire more competent managers. 
B) a Nash equilibrium does not exist. 
C) they are limited in their ability to calculate and may not succeed in maximizing profits. 
D) it is not possible to maximize profits.

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) Firm A has a dominant strategy. 
B) Firm B has a dominant strategy. 
C) Neither firm entering is a Nash equilibrium. 
D) The outcome of the game is unpredictable. 
A) Firm A has a dominant strategy. 
B) Firm B has a dominant strategy. 
C) Neither firm entering is a Nash equilibrium. 
D) The outcome of the game is unpredictable.

Question 19

In the example of coordination problems between Google and Motorola Mobility, one method to solve the problems was

Accepted Answer

A) to undertake a merger or acquisition. 
B) form a joint venture. 
C) for one firm to subcontract with the other. 
D) All of the above. 
A) to undertake a merger or acquisition. 
B) form a joint venture. 
C) for one firm to subcontract with the other. 
D) All of the above.

Question 20

When a bargaining solution is reached,

Accepted Answer

A) each player receives a net surplus greater than or equal to zero. 
B) we have a Nash equilibrium. 
C) the sum of the net surpluses is the Nash product. 
D) Both A and C. 
A) each player receives a net surplus greater than or equal to zero. 
B) we have a Nash equilibrium. 
C) the sum of the net surpluses is the Nash product. 
D) Both A and C.

If decision makers have limited ability to calculate profits from all possible combinations of options, they are said to have

-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?

A sale in which property or a service is sold to the highest bidder is called a(n)

Cheap talk

-The above figure shows the payoff for two firms, A and B, that must each choose to sell either at a high or low price. Determine the dominant strategies for each firm (if any)and the Nash equilibria (if any).

A dominant strategy

In a second-price auction, the winner pays

A disagreement point is

Common knowledge in game theory

A dominated strategy

-The above figure shows a payoff matrix for two firms, A and B, that must choose between a high-price strategy and a low-price strategy. Both firms setting a high price is NOT a Nash equilibrium because

What is the primary difference between a mixed strategy and a pure strategy?

If a game contains private information, then

-The above figure shows a payoff matrix for two firms, A and B, that must choose between a high-price strategy and a low-price strategy. The Nash equilibrium in this game

-The above figure shows a payoff matrix for two firms, A and B, that must choose between selling basic computers or advanced computers. How many Nash equilibria are there?

Which of the following statements is TRUE?

If the managers of your firm have bounded rationality, then

-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?

In the example of coordination problems between Google and Motorola Mobility, one method to solve the problems was

When a bargaining solution is reached,

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

If decision makers have limited ability to calculate profits from all possible combinations of options, they are said to have

-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?

A sale in which property or a service is sold to the highest bidder is called a(n)

Cheap talk

-The above figure shows the payoff for two firms, A and B, that must each choose to sell either at a high or low price. Determine the dominant strategies for each firm (if any)and the Nash equilibria (if any).

A dominant strategy

In a second-price auction, the winner pays

A disagreement point is

Common knowledge in game theory

A dominated strategy

-The above figure shows a payoff matrix for two firms, A and B, that must choose between a high-price strategy and a low-price strategy. Both firms setting a high price is NOT a Nash equilibrium because

What is the primary difference between a mixed strategy and a pure strategy?

If a game contains private information, then

-The above figure shows a payoff matrix for two firms, A and B, that must choose between a high-price strategy and a low-price strategy. The Nash equilibrium in this game

-The above figure shows a payoff matrix for two firms, A and B, that must choose between selling basic computers or advanced computers. How many Nash equilibria are there?

Which of the following statements is TRUE?

If the managers of your firm have bounded rationality, then

-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?

In the example of coordination problems between Google and Motorola Mobility, one method to solve the problems was

When a bargaining solution is reached,

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