Deck 9: Game Theory and Strategic Thinking

Question 1

Which of the following is an example of a real-life rule that might constrain people's behavior?

A)Minimum wage legislation
B)Having 24 hours in a day
C)The earth's limited supply of oil
D)All of these are examples of real-life rules.

Answer 1

All of these are examples of real-life rules.

Question 2

In games, rules:

A)define the actions that are allowed.
B)need to be loosely adhered to in order to predict an outcome.
C)define the winners.
D)outline the wrong choices that could be made.

Answer 2

define the actions that are allowed.

Question 3

All games involve which of the following?

A)A predictable outcome
B)Payoffs
C)Full information
D)A game master

Answer 3

Payoffs

Question 4

The study of how people behave strategically under different circumstances is called:

A)game theory.
B)game strategy.
C)strategy optimization.
D)strategy theory.

Question 5

Game theory is:

A)used to analyze situations in which people behave strategically.
B)used to predict the winners of only certain types of strategic games.
C)used to evaluate microeconomic choices that involve probabilities of different outcomes.
D)the study of games of chance, like solitaire or betting on horse races.

Question 6

Behaving strategically means:

A)evaluating decisions in which players act in their own self-interest, but the interplay of those decisions does not exist.
B)acting to achieve you goal by withholding key information from the person with whom an exchange is being made.
C)acting to achieve your goals while anticipating the impact of others' choices on your own outcomes.
D)evaluating the impact of your choices on an uninvolved third party.

Question 7

Which of the following is an example of a strategy in economic games?Studying an extra hour in order to do better on an examSelecting your next move in a game of chessChoosing to take piano lessons instead of violin lessons

A)I only
B)II only
C)I and III
D)II and III

Question 8

Which of the following statements is true about strategy in economic games?

A)There is only one strategy associated with each outcome.
B)There could be several strategies that can achieve the same goal.
C)All strategies followed in one particular game should be similar in order to be successful.
D)If one person's strategy is wildly different from others' strategies, that person will either come in first or last.

Question 9

When your outcomes depend on another's choices, asking yourself _______ is the key to good decision making.

A)how others will respond
B)what the wants and constraints of those involved are
C)what the trade-offs are
D)why everyone isn't already doing it

Question 10

To economists, games:can involve one person or multiple people.require at least two people.are situations in which people act in another individual's interestare situations in which one player's outcome depends on another player's choices.

A)I and IV
B)II and IV
C)II only
D)I, III, and IV

Question 11

In real life, people's behavior is constrained by the:

A)laws of nature.
B)legislated rules of society.
C)costs of various actions.
D)All of these are rules that constrain people's behavior.

Question 12

In games, strategies are:

A)the outcomes players want to achieve.
B)identical, as everyone wants to achieve the same goal.
C)the plans of action that players follow to achieve their goals.
D)All of these statements are true.

Question 13

Behaving strategically:

A)means recognizing that the actions of others will affect the trade-offs you face and acting accordingly.
B)is an essential part of game theory.
C)involves rational decision-making.
D)All of these statements are true.

Question 14

In a game in which a player's outcome depends on another player's choices, behaving rationally involves:

A)behaving strategically.
B)ignoring the behavior of other actors.
C)acting in a way to help others.
D)All of these statements are true.

Question 15

To economists, a game is:

A)any situation involving at least two players in which one player's outcome depends on another player's choices.
B)a trivial pursuit that should not be used to analyze the economy or its actors.
C)a way to simplify and eliminate strategic situations, like war between nations.
D)All of these statements are true.

Question 16

All games involve which of the following?Multiple playersStrategiesPayoffs

A)I only
B)II and III only
C)I and II only
D)I, II, and III

Question 17

Game theory is:

A)the study of how people behave strategically under different circumstances.
B)used by economists to evaluate behavior in a variety of settings.
C)a useful tool in predicting strategic behavior.
D)All of these statements are true.

Question 18

All games involve which of the following?

A)Strategies
B)Someone to enforce the rules
C)Cards or dice
D)Full information

Question 19

Economic games can be used to analyze decisions regarding which of the following areas of concern?

A)War
B)Business
C)Environmental protection
D)All of these can be analyzed using economic games.

Question 20

All games involve which of the following?

A)Rules
B)Chance events
C)Dice
D)Cards

Question 21

According to the figure shown, both players:

A)will cooperate in an attempt to reach a stable equilibrium, but will not achieve it.
B)will act in self-interest and achieve a stable, but less than optimum, equilibrium.
C)will act in self-interest and achieve an optimum equilibrium that is stable.
D)have an incentive to charge a low price and undercut the competition.

Question 22

The figure shown represents a simultaneous-move game between two classmates working on a project together. Each person must decide whether to work hard on the project or to slack off. Which of the following statements is true?

A)Neither player has a dominant strategy.
B)This game is a prisoners' dilemma.
C)Only one player has a dominant strategy.
D)The Nash Equilibrium in this game is for both Tia and Emma to work hard.

Question 23

The prisoner's dilemma is a:

A)zero sum game.
B)game of chance.
C)game with no dominant strategies.
D)game with a stable equilibrium.

Question 24

The game in the figure shown is a version of:

A)the prisoner's dilemma.
B)the first-mover advantage.
C)a sequential game.
D)a repeated game.

Question 25

In the prisoners' dilemma:

A)a dominant strategy exists for only one player.
B)a noncooperative outcome is predicted.
C)a cooperative win-win outcome can be predicted.
D)All of these statements are true.

Question 26

In the prisoner's dilemma:

A)a stable outcome is impossible.
B)strategy does not affect the outcome.
C)a stable outcome is possible.
D)a commitment strategy is needed to reach a stable outcome.

Question 27

In the prisoner's dilemma, players:

A)will always choose to cooperate if they can communicate in advance.
B)may or may not choose to cooperate, even if they can communicate in advance.
C)will always choose to cooperate, with or without advance communication.
D)will only choose to cooperate if they are honest and trustworthy.

Question 28

Payoffs are:

A)the rewards that come from particular actions.
B)always monetary.
C)things that are only enjoyed by the winner.
D)bribes made to gain some advantage unfairly during a game.

Question 29

A decision matrix:

A)summarizes the players, strategies, and payoffs associated with a simultaneous-move game.
B)outlines the clear outcome of any strategy-based game.
C)provides the same information as a decision tree, just in a different format.
D)All of these are true.

Question 30

The prisoners' dilemma is a game of strategy in which people:

A)make rational choices that lead to a less than ideal result for all.
B)make rational choices that lead to an ideal result for all.
C)are led to be as well off as possible without making another worse off.
D)make irrational choices that lead to an ideal result for all.

Question 31

The game in the figure shown will result in which stable outcome?

A)Nike charges a high price and adidas charges a low price.
B)Nike charges a low price and adidas charges a high price.
C)Nike and adidas both charge a low price.
D)Nike and adidas both charge a high price.

Question 32

In game theory, _______ would be considered a payoff.

A)being the first mover in a game
B)sharing information only with a select few
C)monetary gains made by a player
D)giving an advantage to only one player

Question 33

The players in a prisoner's dilemma:

A)would be much better off if they could cooperate.
B)have an incentive to never cooperate.
C)have a dominant strategy to never cooperate.
D)All of these statements are true.

Question 34

Which of the following is an example of a payoff in a game?

A)A salary
B)Winning an election
C)Having clean drinking water
D)All of these are examples of payoffs.

Question 35

The figure shown portrays a game using a:

A)decision tree.
B)decision matrix.
C)flowchart.
D)graph.

Question 36

The prisoners' dilemma involves:only two players.any number of players.individual persons only.individuals or organizations.

A)I and IV
B)II and III
C)I and III
D)II and IV

Question 37

The prisoner's dilemma can be summarized in a:

A)strategy matrix.
B)strategy tree.
C)decision matrix.
D)flowchart.

Question 38

In a prisoners' dilemma,

A)the ideal outcome could be reached if communication between players was allowed.
B)the outcome is less than ideal for at least one player.
C)the ideal outcome could be reached if players behaved rationally.
D)the outcome is less than ideal for all players.

Question 39

The game in the figure shown is a version of:

A)a sequential game.
B)a one-time game.
C)a cooperative game.
D)an ultimatum.

Question 40

In the prisoner's dilemma:

A)a cooperative strategy could lead to a more beneficial outcome for both players.
B)a noncooperative strategy will lead to a positive-positive outcome.
C)a stable outcome is impossible.
D)neither player has a dominant strategy.

Question 41

The figure shown represents the payoffs involved when Sarah and Joe work on a school project together for a single grade. They both will enjoy a higher grade when more effort is put into the project, but they also get pleasure from goofing off and not working on the project. The payoffs can be thought of as the utility each would get from the effort they individually put forth and the grade they jointly receive.The game in the figure is a version of:

A)the prisoners' dilemma.
B)the first-mover advantage.
C)a sequential game.
D)a repeated game.

Question 42

The figure shown represents the payoffs involved when Sarah and Joe work on a school project together for a single grade. They both will enjoy a higher grade when more effort is put into the project, but they also get pleasure from goofing off and not working on the project. The payoffs can be thought of as the utility each would get from the effort they individually put forth and the grade they jointly receive.If Sarah and Joe are faced with the choices outlined in the figure, what outcome could we predict?

A)Both Joe and Sarah will put forth low effort.
B)Joe will put forth high effort and Sarah will put forth low effort.
C)Joe will put forth low effort and Sarah will put forth high effort.
D)Both Joe and Sarah will put forth high effort.

Question 43

According to the figure shown, if adidas commits to charging a low price, then Nike should:

A)charge a high price.
B)leave the market.
C)charge a low price.
D)give an ultimatum.

Question 44

The figure shown represents the payoffs involved when Sarah and Joe work on a school project together for a single grade. They both will enjoy a higher grade when more effort is put into the project, but they also get pleasure from goofing off and not working on the project. The payoffs can be thought of as the utility each would get from the effort they individually put forth and the grade they jointly receive.What outcome can we predict for this game?

A)Joe will put forth high effort and Sarah will put forth low effort.
B)Joe will put forth low effort and Sarah will put forth high effort.
C)Joe and Sarah will both put forth low effort.
D)Joe and Sarah will both put forth high effort.

Question 45

If the game in the figure shown results in a stable outcome, Nike will earn profits of:

A)$2 million.
B)$4 million.
C)$10 million.
D)$15 million.

Question 46

The figure shown represents the payoffs involved when Sarah and Joe work on a school project together for a single grade. They both will enjoy a higher grade when more effort is put into the project, but they also get pleasure from goofing off and not working on the project. The payoffs can be thought of as the utility each would get from the effort they individually put forth and the grade they jointly receive.The game in the figure is a version of:

A)a sequential game.
B)a one-time game.
C)a cooperative game.
D)an ultimatum.

Question 47

According to the figure shown, adidas:

A)should charge a low price, regardless of what Nike chooses to do.
B)should charge a high price, regardless of what Nike chooses to do.
C)does not have a dominant strategy.
D)should use the first-mover advantage and charge a low price.

Question 48

According to the figure shown, if Nike commits to charging a high price, then adidas should:

A)charge a high price.
B)charge a low price.
C)leave the market.
D)give an ultimatum.

Question 49

The figure shown represents the payoffs involved when Sarah and Joe work on a school project together for a single grade. They both will enjoy a higher grade when more effort is put into the project, but they also get pleasure from goofing off and not working on the project. The payoffs can be thought of as the utility each would get from the effort they individually put forth and the grade they jointly receive.According to the figure, if Joe puts forth high effort, then Sarah should:

A)put forth high effort.
B)put forth low effort.
C)refrain from making a decision.
D)convince Joe to put forth low effort.

Question 50

The figure shown represents the payoffs involved when Sarah and Joe work on a school project together for a single grade. They both will enjoy a higher grade when more effort is put into the project, but they also get pleasure from goofing off and not working on the project. The payoffs can be thought of as the utility each would get from the effort they individually put forth and the grade they jointly receive.According to the figure, if Sarah puts forth low effort, then Joe should:

A)put forth high effort.
B)put forth low effort.
C)refrain from making a decision.
D)convince Sarah to put forth high effort.

Question 51

The figure shown represents the payoffs involved when Sarah and Joe work on a school project together for a single grade. They both will enjoy a higher grade when more effort is put into the project, but they also get pleasure from goofing off and not working on the project. The payoffs can be thought of as the utility each would get from the effort they individually put forth and the grade they jointly receive.If Joe and Sarah act in their own self-interest, what utility will Sarah receive?

A)6
B)10
C)7
D)15

Question 52

The figure shown represents the payoffs involved when Sarah and Joe work on a school project together for a single grade. They both will enjoy a higher grade when more effort is put into the project, but they also get pleasure from goofing off and not working on the project. The payoffs can be thought of as the utility each would get from the effort they individually put forth and the grade they jointly receive.If Joe and Sarah act in their own self-interest, what utility will Sarah receive?

A)Only Joe
B)Only Sarah
C)Neither Sarah nor Joe
D)Both Sarah and Joe

Question 53

A strategy that is the best one to follow no matter what strategy other players choose is called a:

A)golden decision.
B)no-regrets strategy.
C)dominant strategy.
D)zero-sum strategy.

Question 54

The figure shown represents the payoffs involved when Sarah and Joe work on a school project together for a single grade. They both will enjoy a higher grade when more effort is put into the project, but they also get pleasure from goofing off and not working on the project. The payoffs can be thought of as the utility each would get from the effort they individually put forth and the grade they jointly receive.According to the figure:

A)this game has no stable equilibrium.
B)Sarah and Joe will each act in self-interest and achieve a stable, but less than optimum, equilibrium.
C)Sarah and Joe will each act in self-interest and achieve an optimum equilibrium that is stable.
D)Sarah and Joe are incentivized to put forth high effort.

Question 55

The figure shown represents the payoffs involved when Sarah and Joe work on a school project together for a single grade. They both will enjoy a higher grade when more effort is put into the project, but they also get pleasure from goofing off and not working on the project. The payoffs can be thought of as the utility each would get from the effort they individually put forth and the grade they jointly receive.What payoff can we predict Joe will receive as the outcome of this game?

A)5
B)7
C)9
D)13

Question 56

According to the figure shown, Nike:

A)has a dominant strategy to charge a high price.
B)does not have a dominant strategy.
C)will reach an optimum outcome by acting in its own self-interest.
D)has a dominant strategy to charge a low price.

Question 57

The figure shown represents the payoffs involved when Sarah and Joe work on a school project together for a single grade. They both will enjoy a higher grade when more effort is put into the project, but they also get pleasure from goofing off and not working on the project. The payoffs can be thought of as the utility each would get from the effort they individually put forth and the grade they jointly receive.According to the figure, Sarah:

A)should put forth low effort, regardless of what Joe chooses to do.
B)should put forth high effort, regardless of what Joe chooses to do.
C)does not have a dominant strategy.
D)should use the first-mover advantage and put forth low effort.

Question 58

A dominant strategy:

A)exists in every game.
B)is the best one to follow no matter what strategy other players choose.
C)is always the same for all players of a game.
D)awards the highest achievable payoff in a game.

Question 59

If Nike and adidas are faced with the game in the figure shown, we can predict:

A)an outcome that is good for society but less than ideal for these companies.
B)an outcome that is less than ideal for society, but optimal for these companies.
C)that both companies will choose their dominant strategies, and society will lose.
D)None of these is likely to happen.

Question 60

If the players in the figure shown act in their own self-interest, then we know that adidas will earn:

A)$2 million.
B)$8 million.
C)$6 million.
D)$10 million.

Question 61

The figure shown represents the choices and payoffs (company profits)of two music shops-MiiTunes and The Rock Shop. MiiTunes is an established business in the area deciding whether to charge its usual high prices or to charge very low prices, in the hopes that a new business will not be able to compete at these prices. The Rock Shop is trying to decide whether or not it should enter the market.According to the figure, if The Rock Shop enters the market, MiiTunes will:

A)charge high prices.
B)charge low prices.
C)leave the market.
D)threaten to charge low prices.

Question 62

The figure shown represents the choices and payoffs (company profits)of two music shops-MiiTunes and The Rock Shop. MiiTunes is an established business in the area deciding whether to charge its usual high prices or to charge very low prices, in the hopes that a new business will not be able to compete at these prices. The Rock Shop is trying to decide whether or not it should enter the market.According to the figure, The Rock Shop:

A)should enter the market, regardless of what MiiTunes chooses to do.
B)should not enter the market, regardless of what MiiTunes chooses to do.
C)does not have a dominant strategy.
D)has more than one dominant strategy.

Question 63

Reaching a Nash equilibrium means that:

A)the outcome of the game will be positive-positive.
B)a cooperative equilibrium has been reached.
C)no player would want to change strategy upon discovering what other players are doing.
D)one player will always want to change strategy upon discovering the decisions of other players.

Question 64

If there is no single strategy in a game that is best regardless of other players' behavior:

A)there is no dominant strategy.
B)the dominant strategy will be to defect.
C)a noncooperative equilibrium is the only possible outcome.
D)the game is a prisoners' dilemma.

Question 65

A noncooperative equilibrium is one in which:

A)the participants act independently, pursuing only their individual interests.
B)a negative-negative outcome always results.
C)a dominant strategy exists for both players.
D)each player ignores the actions of the other players.

Question 66

Games with a noncooperative equilibrium:

A)always result in a negative-negative outcome.
B)always result in a positive-positive outcome.
C)can result in either a positive-positive or negative-negative outcome.
D)always result in a positive-negative outcome (zero-sum).

Question 67

Which of the following statements about games is true?

A)They will always have a dominant strategy
B)They are always zero sum
C)They will always have several stable outcomes
D)None of these are true.

Question 68

{MISSING IMAGE}According to the figure shown, Apple:

A)should charge a low price, regardless of what Google chooses to do.
B)should charge a high price, regardless of what Google chooses to do.
C)does not have a dominant strategy.
D)should use the first-mover advantage and charge a low price.

Question 69

In a prisoner's dilemma:players have no regrets, given what the other players have chosen.there must be a dominant strategy for all players.equilibrium will never be reached.

A)I and II only
B)III only
C)I, II, and III
D)None of these are correct.

Question 70

The figure shown represents the payoffs involved when Sarah and Joe work on a school project together for a single grade. They both will enjoy a higher grade when more effort is put into the project, but they also get pleasure from goofing off and not working on the project. The payoffs can be thought of as the utility each would get from the effort they individually put forth and the grade they jointly receive.According to the figure, Joe:

A)has a dominant strategy to put forth high effort.
B)does not have a dominant strategy.
C)has a dominant strategy to put forth low effort.
D)will reach an optimum outcome by acting in his own self-interest.

Question 71

The figure shown represents the choices and payoffs (company profits)of two music shops-MiiTunes and The Rock Shop. MiiTunes is an established business in the area deciding whether to charge its usual high prices or to charge very low prices, in the hopes that a new business will not be able to compete with these prices. The Rock Shop is trying to decide whether or not it should enter the market.According to the figure, MiiTunes:

A)has a dominant strategy to charge low prices.
B)does not have a dominant strategy.
C)has a dominant strategy to charge high prices.
D)has more than one dominant strategy.

Question 72

Which of the following statements is true?

A)Games with a negative-negative outcome must have a noncooperative equilibrium.
B)A negative-negative outcome is not necessarily the best one for the players involved.
C)When players act in their own self-interest, a negative-negative outcome results.
D)All of these statements are true.

Question 73

If Nike and adidas are faced with the game in the figure shown, we can see that:

A)Nike has a dominant strategy, but adidas does not.
B)adidas has a dominant strategy, but Nike does not.
C)Neither company has a dominant strategy.
D)Both companies have a dominant strategy.

Question 74

{MISSING IMAGE}According to the figure shown, Apple:

A)has a dominant strategy to charge a high price.
B)does not have a dominant strategy.
C)will reach an optimum outcome by acting in its own self-interest.
D)has a dominant strategy to charge a low price.

Question 75

The figure shown represents the choices and payoffs (company profits)of two music shops-MiiTunes and The Rock Shop. MiiTunes is an established business in the area deciding whether to charge its usual high prices or to charge very low prices, in the hopes that a new business will not be able to compete at these prices. The Rock Shop is trying to decide whether or not it should enter the market.According to the figure:

A)The Rock Shop has a dominant strategy, but MiiTunes does not.
B)MiiTunes has a dominant strategy, but The Rock Shop does not.
C)neither store has a dominant strategy.
D)both stores have a dominant strategy.

Question 76

The figure shown represents the choices and payoffs (company profits)of two music shops-MiiTunes and The Rock Shop. MiiTunes is an established business in the area deciding whether to charge its usual high prices or to charge very low prices, in the hopes that a new business will not be able to compete at these prices. The Rock Shop is trying to decide whether or not it should enter the market.According to the figure, if MiiTunes charges low prices, The Rock Shop:

A)will enter the market and will earn $4 million.
B)will enter the market and will lose $2 million.
C)will not enter the market and will earn $0.
D)There is not enough information to determine what The Rock Shop will do.

Question 77

Which of the following statements about games is true?

A)There is always only one possible outcome.
B)Noncooperative equilibriums are always negative-negative outcomes.
C)There may be several stable outcomes.
D)A dominant strategy must be present to reach a stable equilibrium.

Question 78

A Nash equilibrium:

A)is reached when all players choose the best strategy they can, given the choices of all other players.
B)occurs when no player has an incentive to change strategy, given other players' decisions.
C)is considered to be a stable outcome of a game.
D)All of these statements are true.

Question 79

When all players in a game choose the best strategy they can, given the choices of all other players, there is always a:

A)Nash equilibrium.
B)positive-positive outcome.
C)cooperative equilibrium.
D)negative-negative outcome.

Question 80

Games:

A)only have one possible stable outcome.
B)may have noncooperative equilibriums that are positive-positive outcomes.
C)can only reach equilibrium if there is a dominant strategy present.
D)None of these are correct.