Chapter 15: Quiz
Game Theory Models of Pricing
1.
A common assumption about the players in a game is that
a.
both players know the payoff matrix.
b.
the players have the same information about the payoff matrix.
c.
both of the players pursue a rational strategy.
d.
all of the above.
2.
The Prisoners’ Dilemma is a situation in which
a.
players cannot cooperate.
b.
people go to jail.
c.
the worst outcome is guaranteed.
d.
people acting in their own self-interest leads to the worst outcome rather than the
best outcome.
3.
The twin non-confess strategy choice in the Prisoners’ dilemma can be described as
a.
non-Pareto optimal and unstable.
b.
Pareto optimal and unstable.
c.
non-Pareto optimal and stable.
d.
Pareto optimal and stable.
4.
A “credible” threat is a threat of an action that a player
a.
thinks is very costly.
b.
can easily back out of.
c.
would find suicidal.
d.
would be willing to undertake.
5.
An infinitely repeated game promising A per period with continuing cooperation, B for
the one period gain from cheating, and C per period for the non-cooperative solution (B >
A > C) will have a subgame perfect Nash equilibrium in trigger strategies providing
a.
i > B/(A + C).
b.
i > (A + B)/(B + C).
c.
i > (A – B)/(A – C).
d.
i > (C – A)/(A – B).
e.
none of the above.
6.
The general message of “Folk Theorems” is that
a.
Nash equilibria may not be sustainable over many replications of a game.
b.
Payoffs that are unambiguously preferred to Nash equilibria may be sustainable
over many replications of a game.
c.
Credible threats may inhibit the achievement of mutually beneficial outcomes
over many replications of a game.
d.
Just plain folk play the best games.
7.
A price leader in the Stackelberg model is assumed to know
a.
b.
c.
d.
8.
the market demand curve.
its own cost function.
its rival’s reaction function
all of the above.
A cartel-like collusive solution can be a Nash equilibrium only in price-setting games
with
a.
infinite replications.
b.
finite replications.
c.
dominant strategies.
d.
more than two players.
Questions 9-11 refer to the following game:
9.
If this game is played as a simultaneous game, the equilibrium will be:
a.
Up, Left
b.
Up, Right
c.
Down, Left
d.
Down, Right
e.
none of the above.
10.
If this game is played as a sequential game with Player B moving first, the equilibrium
will be:
a.
Up, Left
b.
Up, Right
c.
Down, Left
d.
Down, Right
e.
none of the above.
11.
This game somewhat resembles the prisoners’ dilemma because:
a.
Players A and B are likely to go to prison.
b.
this game is symmetric.
c.
the equilibrium outcome is not the best outcome.
Chapter 20/Externalities and Public Goods 
d.
3
the payoffs are represented in a payoff matrix.
Questions 12-14 refer to the following game:
12.
If this game is played as a simultaneous game, then in a mixed strategy eqilibrium:
a.
Player A will play Up with probability 17/18.
b.
Player A will play Up with probability 12/28.
c.
Player B will play right with probability 12/23.
d.
none of the above.
13.
be:
If this game is played as a sequential game with Player A going first, the equilibrium will
a.
b.
c.
d.
14.
be:
If this game is played as a sequential game with Player B going first, the equilibrium will
a.
b.
c.
d.
15.
Up, Left
Up, Right
Down, Left
Down, Right
Up, Left
Up, Right
Down, Left
Down, Right
The following game:
is most like which of the following games?
a.
b.
c.
d.
chicken.
prisoners’ dilemma
battle of the sexes
the story from the lecture notes where I was thinking about throwing my keys into
the swamp.