Question 1

When a prisoners' dilemma game is repeated a finite number of times (T)

Accepted Answer

In a finitely repeated prisoners' dilemma, rational players foresee the end of cooperation and default to the non-cooperative Nash equilibrium from the first round, as they anticipate the unraveling of cooperation in the final round and adjust their strategies accordingly from the start.

Question 2

A an example of a game in which a leader moves first,and then the other rivals follow is a ________ game.

Accepted Answer

In the Stackelberg model, there is a leader who moves first and then the other firms or rivals follow. The leader has an advantage because it can anticipate the reactions of its rivals and adjust its strategy accordingly. This game is commonly used in industries where one firm has a dominant position and other firms follow its lead. The Cournot model, on the other hand, is a simultaneous move game where each firm chooses its output level at the same time. The finite move and Master-Slave games are not relevant in this context.

Question 3

A dynamic game is a game

Accepted Answer

A dynamic game is a game that is sequential or repeated, meaning that the players move one after another and can observe what the previous player did. This is in contrast to a static game, in which all players move at the same time. While payoffs may change in a dynamic game, it is not a defining characteristic. Actions and strategies are interchangeable terms in game theory, so the inclusion of "actions instead of strategies" does not help identify the correct answer. "Highly animated" is a subjective term that does not have a clear meaning in the context of game theory.

Question 4

If firms execute a strategy that triggers a permanent punishment,the result in an indefinitely repeated game is

Accepted Answer

In a indefinitely repeated game, the non-cooperative Nash equilibrium is the most likely outcome if firms execute a strategy that triggers a permanent punishment. This is because the firms will have to continue playing the game repeatedly, and the risk of punishment from the other firm will discourage defection from the agreed strategy. However, this outcome may not be economically efficient, as it may lead to lower profits for both firms compared to a collusive Nash equilibrium.

Question 5

In a finitely repeated prisoners' dilemma game

Accepted Answer

The answer of In a finitely repeated prisoners' dilemma game
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Question 6

Which of the following is a dynamic game?

Accepted Answer

Chess is a dynamic game because it involves sequential moves and strategy, where players make decisions based on the evolving state of the game.

Question 7

The trench warfare case during World War I is an example of a(n)

Accepted Answer

The answer of The trench warfare case during World War...

Question 8

In an indefinitely repeated game,a firm might use a ________ to ________ a rival that defects from a cooperative strategy.

Accepted Answer

In an indefinitely repeated game, a firm can use a trigger strategy to punish a rival that defects from a cooperative strategy. The trigger strategy involves cooperating initially and then retaliating by punishing the rival if they defect. This can be an effective way to maintain cooperation and deter defection in the long run.

Question 9

In a Stackelberg oligopoly

Accepted Answer

In a Stackelberg oligopoly, the leader firm makes the first move by setting its output level, and then the follower firm responds by choosing its output level in the second stage, taking into account the leader's decision. This model assumes sequential moves rather than simultaneous actions, distinguishing it from other models like Cournot or Bertrand competition.

Question 10

If an incumbent faces an identical potential entrant with no costs of entry,the incumbent will

Accepted Answer

In this scenario, the incumbent would act as a Stackelberg leader to deter entry by producing at a level that makes entry unprofitable for the potential entrant. This strategic move leverages the first-mover advantage to secure a dominant position in the market.

Question 11

Dynamic and static games have outcomes that

Accepted Answer

Dynamic and static games may have different outcomes. In static games, players make decisions simultaneously, whereas in dynamic games, players make decisions sequentially. This can result in different outcomes as the decisions made by earlier players can affect the decisions made by later players.

Question 12

In the Stackelberg model,the leader has a first-mover advantage because it

Accepted Answer

In the Stackelberg model, the leader has a first-mover advantage because it commits to producing a larger quantity, which forces the follower to produce less and capture a smaller market share. This allows the leader to capture a larger market share and earn higher profits. The other options, such as having lower costs, reacting to the follower's decision, or differentiating its output, do not necessarily provide a first-mover advantage in the Stackelberg model.

Question 13

If firms adopt a strategy that triggers a permanent punishment,the result in an indefinitely repeated game is

Accepted Answer

The answer of If firms adopt a strategy that triggers...

Question 14

The Cournot and Stackelberg models are similar,except Cournot ________ and Stackelberg ________.

Accepted Answer

In the Cournot model, firms choose quantities simultaneously and independently, making it a static model. In the Stackelberg model, one firm sets its output first, and the other firms follow, making it a dynamic model.

Question 15

Implicit collusion,where players do not have an explicit agreement

Accepted Answer

Implicit collusion is not strictly prohibited under antitrust laws because it is difficult to prove and doesn't involve an explicit agreement. However, it still has the potential to harm competition and consumers. Implicit collusion can lead to higher prices and reduced output, which reduces total surplus in the market.

Question 16

When there's uncertainty as to the length of a game

Accepted Answer

If there is uncertainty about the length of the game, firms may adopt trigger strategies to encourage cooperation. These strategies involve selecting an initial cooperative action and then continuing to cooperate as long as the other firm does as well. This can potentially allow for cooperation in games with uncertain length.

Question 17

In a tit-for-tat strategy,a player

Accepted Answer

In tit-for-tat strategy, a player copies the action of its rival's prior move in the subsequent rounds. This means that if the rival player cooperated in the previous round, the player will also cooperate in the next round. On the other hand, if the rival player defected in the previous round, the player will also defect in the next round. This strategy is effective in promoting cooperation since both players can earn higher payoffs if they cooperate consistently.

Question 18

Repeated games are conducive to

Accepted Answer

In repeated games, players have the opportunity to establish a reputation and learn from each other's past behavior. This encourages tacit cooperation, where players may not explicitly agree to cooperate but can learn through trial and error that cooperation leads to better outcomes for both players in the long run.

Question 19

In a repeated prisoners' dilemma game

Accepted Answer

In a repeated prisoners' dilemma game, cooperation may result if the game is played indefinitely. This is because players have the opportunity to punish their opponents if they fail to cooperate in previous rounds, which can incentivize cooperation in future rounds.

Question 20

Which of the following is a sequential game?

Accepted Answer

Monopoly is a sequential game where players take turns making decisions and moves based on the outcomes of previous players' moves.

Quiz 13: Strategies Over Time