Exam 14: Game Theory and the Economics of Information

Use the following table to answer the question : Table 14-3 : represents the payoff matrix of firms A and B,when they choose to produce either high output or low output.In each cell,the figure on the left indicates Firm B's payoffs and the figure on the right indicates Firm A's payoffs. -Given the information in Table 14-3,if X = 15 and Y = 10,which firm has a dominant strategy?

The table given below represents the payoff matrix of firms A and B,when they choose to produce low or high output.In each cell,the figure on the left indicates Firm B's payoffs and the figure on the right indicates Firm A's payoffs. The information in Table 14-2 implies that the game has:

Which of the following oligopoly models has an equilibrium that can be described as a Nash equilibrium?

Which of the following,if true,would allow oligopolists to enjoy greater profits through collusion?

A prisoner's dilemma equilibrium is:

Use the following table to answer the question : Table 14-5: shows the payoffs (in terms of years spent in the jail)to Sundance and Butch who choose between the options 'confess' and 'don't confess'.In each cell,the figure on the left indicates payoffs for Butch and the figure on the right indicates payoffs for Sundance. -In Table 14-5,what values will not make this payoff matrix a prisoner's dilemma?

A buildup of nuclear weapons between two or more nations appears both counterproductive and counterintuitive.But one theory,Mutually Assured Destruction,argues that it is to a nation's benefit to amass an arsenal of weapons so vast that their use could destroy the whole world.Using a prisoner's dilemma matrix with a Nash equilibrium,show how that Country A choosing a strategy of spending vast amounts on nuclear weaponry (call it "High"),enough to destroy all of society,rather than a smaller amount (call it "Low),sufficient for self-defense only,is a dominant strategy and a deterrent over Country B.

All games that have a dominant-strategy equilibrium _____ have a Nash equilibrium;all games with a Nash equilibrium _____ have a dominant-strategy equilibrium.

Assume that Hines Corporation and Lamb Inc. ,each produce a homogeneous product and that the two firms are the only two sellers in the market.The two firms have agreed to a collusive price agreement and expect demand and cost conditions to remain unchanged over time.If the pricing game is repeated indefinitely and Hines knows that Lamb is playing a tit-for-tat strategy,then Hines' best strategy is to:

Explain how advertising,when undertaken by all competing firms,actually reduces the market power of the firms.

The "lemons" model suggests that in cases of asymmetric information between buyers and sellers:

A representation of how each combination of choices affects the profits of each player is known as a:

In an oligopoly game,the incentive to cheat is reduced when:

The "lemons" model suggests that in cases of asymmetric information between buyers and sellers:

The prisoner's dilemma illustrates a situation in which:

Use the following table to answer the question : Table 14-5: shows the payoffs (in terms of years spent in the jail)to Sundance and Butch who choose between the options 'confess' and 'don't confess'.In each cell,the figure on the left indicates payoffs for Butch and the figure on the right indicates payoffs for Sundance. -In Table 14-5,what values for X and Y will make this payoff matrix a prisoner's dilemma?

The _____ price of a product is the sum of the money price and the search cost that consumers incur.

Use the following table to answer the question : Table 14-4 : describes the payoffs to Jack and Jill when each chooses to produce rock,scissors,or paper.The payoff matrix indicates the dollar payments from the loser to the winner. -Refer to Table 14-4.Assume for this question that "paper" is not allowed as a choice and identify the Nash equilibrium,if any.

If a firm is better off with a particular strategy regardless of what the other firm does,then it is called the firm's:

Higher-priced products exhibit less relative price dispersion because: