1.

award:

5 out of

5.00 points

Question and Exercise 20-3

Is the solution to the prisonerâ€™s dilemma game a Nash equilibrium? Why?

Worksheet

Learning Objective: 20-01 Explain what game theory is and give an

example of a game and a solution to a game.

436

Question and Exercise 20-3

Section: Game Theory and the Economic Way of Thinking

2.

award:

5 out of

5.00 points

Question and Exercise 20-4

If a player does not have a dominant strategy, can the game still have a

Nash equilibrium?

Worksheet

Learning Objective: 20-01 Explain what game theory is and give an

example of a game and a solution to a game.

436

Question and Exercise 20-4

Section: Game Theory and the Economic Way of Thinking

3.

award:

5 out of

5.00 points

Question and Exercise 20-5

Two firms have

entered an agreement to set prices. The accompanying payoff matrix shows profit

for each firm in a market depending upon whether the firm cheats on the

agreement by reducing its prices.

Firm B

Cheats

Does not cheat

Firm A

Cheats

A: $0

B: $0

A: $100

B: ?$50

Does not cheat

A: ?$50

B: $100

A: $50

B: $50

a. What is the dominant strategy for each firm, if any?

Firm A: .

Firm B:.

b. What is the Nash equilibrium, if any?

.

4.

award:

5 out of

5.00 points

Question and Exercise 20-5 (algo)

Two firms have

entered an agreement to set prices. The accompanying payoff matrix shows profit

for each firm in a market depending upon whether the firm cheats on the

agreement by reducing its prices.

Firm B

Cheats

Does not cheat

Firm A

Cheats

A: $0

B: $0

A: $50

B: $-100

Does not cheat

A: $-100

B: $50

A: $40

B: $40

a. What is the dominant strategy for each firm, if any?

Firm A: .

Firm B: .

b. What is the Nash equilibrium, if any?

.

5 award:

5 out of

5.00 points

Question and Exercise 20-6

Two people are

arrested and charged with the same crime. Each is given the opportunity to

accuse the other of the crime. The payoff matrix shows how much time each will

serve depending on who rats out whom.

Prisoner B

Accuses A

Remains silent

Prisoner A

Accuses B

A: 2 years

B: 2 years

A: Goes free

B: 10 years

Remains silent

A: 10 years

B: Goes free

A: Goes free

B:

Goes free

a. What is the dominant strategy for each, if any?

Prisoner A: .

Prisoner B: .

b. What is the Nash equilibrium, if any?

Instructions: You may select

more than one answer. Click the box with a check mark for correct answers and

click to empty the box for the wrong answers.

Prisoner

A accuses and Prisoner B remains silent.

Both

accuse the other prisoner.

Both

remain silent.

Prisoner

A remains silent and Prisoner B accuses.

There

is no Nash equilibrium.

rev: 07_30_2013_QC_33121

6.

award:

5 out of

5.00 points

Question and Exercise 20-6 (algo)

Two people are

arrested and charged with the same crime. Each is given the opportunity to

accuse the other of the crime. The payoff matrix shows how much time each will

serve depending on who rats out whom.

Prisoner B

Accuses A

Remains silent

Prisoner A

Accuses B

A: 7 years

B: 6 years

A: 1 year

B: 4 years

Remains silent

A: 3 years

B: 5 years

A: Goes free

B: Goes free

a. What is the dominant strategy for each, if any?

Prisoner A: .

Prisoner B: .

b. What is the Nash equilibrium, if any?

7.

award:

3.34 out of

5.00 points

Question and Exercise 20-7

For each of the following, state whether Player A and Player B have a

dominant strategy and, if so, what each playerâ€™s dominant strategy is. (Note: Payoffs

represent dollars earned.)

a.

Player B

X

Y

Player A

X

A: 5

B: 5

A: 10

B: 2

Y

A: 2

B: 10

A: 8

B: 8

Dominant strategy for:

Player A.

Player B: .

b.

Player B

X

Y

Player A

X

A: 8

B:?8

A: 4

B:?4

Y

A: 10

B:?10

A: ?5

B: 5

Dominant strategy for:

Player A: .

Player B: .

c.

Player B

X

Y

Player A

X

A: ?2

B: 1

A: ?1

B: 2

Y

A: ?1

B:?1

A: ?3

B: 1

Dominant strategy for:

Player A: .

Player B: .

Worksheet

Learning Objective: 20-01 Explain what game theory is and give an

example of a game and a solution to a game.

436

Question and Exercise 20-7

Section: Game Theory and the Economic Way of Thinking

8.

award:

5 out of

5.00 points

Question and Exercise 20-7 (algo)

For each of the following, state whether Player A and Player B have a

dominant strategy and, if so, what each playerâ€™s dominant strategy is. (Note: Payoffs

represent dollars earned.)

a.

Player B

X

Y

Player A

X

A: 5

B: 5

A: 6

B: 4

Y

A: 3

B: 7

A: 4

B: 8

Dominant strategy for:

Player A.

Player B: .

b.

Player B

X

Y

Player A

X

A: 10

B: -7

A: 3

B: -3

Y

A: 7

B: -10

A: -6

B: 6

Dominant strategy for:

Player A:.

Player B:

c.

Player B

X

Y

Player A

X

A: 10

B: 4

A: 15

B: 5

Y

A: 8

B: 7

A: 10

B: 3

Dominant strategy for:

Player A: .

Player B: .

9.

award:

5 out of

5.00 points

Question and Exercise 20-8

Would the results of the prisonerâ€™s dilemma game be different if it were

a sequential rather than a simultaneous game?

Worksheet

Learning Objective: 20-02 Discuss how strategic reasoning and backward

induction are used in solving games.

441

Question and Exercise 20-8

Section: An Overview of Game Theory as a Tool in Studying Strategic

Interaction

0.

award:

5 out of

5.00 points

MC Qu. 016 Game theory is designed to study situations in whi…

Game theory is designed to study situations in which each agent’s

decisions are:

interdependent.

independent.

constrained.

uninformed.

Game theory is best applied to strategic thinking. This is when

decisions are interdependent

Multiple Choice

Difficulty: 2 Medium

Section: Strategic Reasoning

MC Qu. 016 Game theory is designed to study situations in whi…

example of a game and a solution to a game.

11.

award:

5 out of

5.00 points

MC Qu. 022 The prisoner’s dilemma is a well-known game in whi…

The prisoner’s dilemma is a well-known game in which:

cooperation is always the best independent action.

noncooperation is not the best joint action but is the best

independent action.

players always cheat.

players never cheat.

In the prisoner’s dilemma game, cooperation is beneficial for both

prisoners but difficult to achieve. There are gains to both cooperative action

and independent action. Individuals don’t always act in their best joint

interest.

Multiple Choice

Difficulty: 2 Medium

Section: Prisoners Dilemma

MC Qu. 022 The prisoner’s dilemma is a well-known game in whi…

example of a game and a solution to a game.

2.

award:

5 out of

5.00 points

MC Qu. 024 The values in a payoff matrix show:

The values in a payoff matrix show:

the gains and losses of decisions for each player regardless of the

decisions of other players.

the best possible outcomes of various players in a game.

the gains and losses of decisions for each player given the decisions

of other players.

the worst possible outcomes of various players in a game.

The values in a payoff matrix show both the gains and the losses of various

decisions based on the decisions of all other players in the game.

Multiple Choice

Difficulty: 2 Medium

Section: Payoff Matrices

MC Qu. 024 The value

13.

award:

5 out of

5.00 points

MC Qu. 027 The equilibrium solution for the following payoff …

The equilibrium solution for the following payoff matrix is:

1, 1.

2, 0.

0, 2.

-1, -1.

The equilibrium solution is where each player maximizes the expected

payoff. A is best off choosing column 2. Therefore, knowing that A will choose

column 2, B will choose row 2.

Multiple Choice

Difficulty: 3 Hard

Section: Payoff Matrices

MC Qu. 027 The equilibrium solution for the following payoff …

example of a game and a solution to a game.

14.

award:

5 out of

5.00 points

MC Qu. 032 Don and Dana have both been accused of insider tra…

Don and Dana have both been accused of insider trading. Don knows that

if he confesses while Dana keeps silent, he will receive a 1-month jail

sentence. He also knows that if Dana confesses and he keeps silent, he will

receive a 12-month jail sentence. If neither of them confesses, there will be

insufficient evidence to convict either of insider trading, but there is enough

evidence to convict each of them individually of obstructing justice, which

carries a 2-month sentence. If both of them confess, they will both serve a

3-month jail sentence. This situation is:

an example of cartel behavior.

an application of the prisoner’s dilemma.

not realistic because those accused of insider trading always keep

silent.

not realistic because those accused of insider trading are never

encouraged to confess.

See the explanation of the prisoner’s dilemma in the text.

Multiple Choice

Difficulty: 3 Hard

Section: Prisoners Dilemma

MC Qu. 032 Don and Dana have both been accused of insider tra…

example of a game and a solution to a game.

15.

award:

5 out of

5.00 points

MC Qu. 034 TV crime shows illustrate the prisoner’s dilemma w…

TV crime shows illustrate the prisoner’s dilemma when:

the judge ponders the sentence for the crimes.

the prisoners go to prison for the first time.

the police interview suspects in the same room.

the police interview suspects in different rooms.

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.

Multiple Choice

Difficulty: 2 Medium

Section: Prisoners Dilemma

MC Qu. 034 TV crime shows illustrate the prisoner’s dilemma w…

example of a game and a solution to a game.

16.

award:

5 out of

5.00 points

MC Qu. 037 What is true about the following payoff matrix?&nb…

What is true about the following payoff matrix?

Players cannot jointly do better by cooperating.

Players cannot escape the 0-0 payoff.

Player A is better off lying that he will choose column 1 and then

choosing column 2.

Player B is better off lying that she will choose row 1 and then

choosing row 2.

Since both players are better off choosing column 1 and row 1,

respectively, which has the same joint payoff as the other options, they are

not better off cooperating. A is better off saying he will choose column 1 and

in fact choosing column 1. B is better off saying she will choose row 1 and in

fact choosing row 1.

Multiple Choice

Difficulty: 2 Medium

Section: Payoff Matrices

MC Qu. 037 What is true about the following payoff matrix?&nb…

example of a game and a solution to a game.

17.

award:

5 out of

5.00 points

MC Qu. 038 What is true about the following payoff matrix?&nb…

What is true about the following payoff matrix?

Only player A has a dominant strategy.

Only player B has a dominant strategy.

Both player A and player B have dominant strategies.

Neither player A nor player B has a dominant strategy.

Since both players are better off choosing column 1 and row 1,

respectively, regardless of what the other player does, both have dominant

strategies.

Multiple Choice

Difficulty: 2 Medium

Section: Dominant and Mixed Strategies

MC Qu. 038 What is true about the following payoff matrix?&nb…

Learning Objective: 20-02 Discuss how strategic reasoning and backward

induction are used in solving games.

18.

award:

5 out of

5.00 points

MC Qu. 042 A Nash equilibrium is:

A Nash equilibrium is:

the payoff that maximizes the joint payoff.

****

the output level that minimizes average total cost.

the strategy that maximizes the outcome of all the players.

the set of strategies such that no player can improve his or her

position by changing his or her own action.

See the definition of a Nash equilibrium in the text. A Nash equilibrium

refers to the set of strategies by all the players, not just one player’s

individual strategy.

Multiple Choice

Difficulty: 2 Medium

Section: Nash Equilibrium

MC Qu. 042 A Nash equilibrium is:

Learning Objective: 20-02 Discuss how strategic reasoning and backward

induction are used in solving games.

19.

award:

5 out of

5.00 points

MC Qu. 044 A Nash equilibrium refers to a:

A Nash equilibrium refers to a:

cooperative game.

a sequential game.

a repeated game.

a noncooperative game.

See the definition of a Nash equilibrium in the text. A Nash equilibrium

refers to a noncooperative game set of strategies. That is, players are unable

to cooperate and attempt to make the best decision for themselves while

considering that the other player follows his or her own best strategy.

Multiple Choice

Difficulty: 2 Medium

Section: Nash Equilibrium

MC Qu. 044 A Nash equilibrium refers to a:

induction are used in solving games.

20.

award:

5 out of

5.00 points

MC Qu. 045 The Nash equilibrium in the following payoff matri…

The Nash equilibrium in the following payoff matrix is:

-1, -1.

-1, 1.

1, -1.

There is no Nash equilibrium.

A Nash equilibrium is a set of strategies for each player in which no

player can improve his or her payoff by changing strategy unilaterally. If B

chooses row 1, A’s best strategy is to choose column 1. But if B chooses row 2,

A’s best strategy is to choose column 2. If A chooses column 1, B’s best

strategy is to choose row 2. But if A chooses column 2, B’s best strategy is to

choose row 1. Thus, there is no Nash equilibrium. Each player can improve his

or her payoff by changing strategy unilaterally.

Multiple Choice

Difficulty: 3 Hard

Section: Nash Equilibrium

MC Qu. 045 The Nash equilibrium in the following payoff matri…

induction are used in solving games.

*