Question 1

Though Nash games are noncooperative,a cooperative outcome is more likely if

Accepted Answer

If firms expect the market relationship to last a long time, they are more likely to consider the long-term gains rather than just the short-term gains. This can lead to a more cooperative outcome in a noncooperative Nash game. In contrast, if firms expect the market relationship to last only for a short time, they may prioritize short-term gains and be less willing to cooperate. Therefore, option C is the best choice.

Question 2

A display of a game in a tree diagram with nodes for every move by the players is a(n)

Accepted Answer

A display of a game in a tree diagram with nodes for every move by the players is an extensive-form game. This type of game considers the order of actions taken by players, and the tree diagram shows all possible paths that the game can take, depending on the decision of the players at each node. The other options (A, B, and C) do not accurately describe this type of game representation.

Question 3

Higher discount rates imply that

Accepted Answer

A higher discount rate implies that present payoffs are more important than future payoffs. This is because a higher discount rate reflects a higher opportunity cost of not having the money available to invest or spend today. In other words, a higher discount rate reflects a preference for receiving money sooner rather than later. Therefore, choice D is the best answer.

Question 4

If a strategic move is credible,it is likely to

Accepted Answer

A credible strategic move is one that is believable and likely to influence the actions of rivals, as they adjust their strategies in response to the move.

Question 5

The process of looking at the final outcome and then reasoning back to initial decisions is called

Accepted Answer

The process of looking at the final outcome and reasoning back to initial decisions is called backward induction. Therefore, the correct choice is (D). The other choices are not correct. A is incorrect because it refers to a general process of making decisions as a manager. B is incorrect because it refers to making decisions at the same time, not looking back from the final outcome. C is incorrect because it is a similar concept to backward induction, but it is the process of reasoning forward from the initial decision rather than reasoning backward from the final outcome.

Question 6

We have two players,A and B,where A moves first and can go L or R,and B moves next and can go T,B,or R.A moves again and can go L,R,or M.The payoffs are decided after this.The best approach to solve such games is through

Accepted Answer

The answer of We have two players,A and B,where A...

Question 7

Though Nash games are noncooperative,a cooperative outcome is more likely if

Accepted Answer

When the long-run gains are greater than the short-run gains, it incentivizes firms to act cooperatively to achieve those long-run gains. This is because they recognize that the benefits of cooperation will outweigh any short-term gains they may get from defecting in the short run. Therefore, a cooperative outcome is more likely in this scenario, even in a non-cooperative Nash game.

Question 8

Though Nash games are noncooperative,a cooperative outcome is more likely if

Accepted Answer

If firms can easily monitor the outcomes from cooperation, they can enforce and maintain cooperative outcomes. This is why successful cartels often occur in industries with a small number of firms, such as OPEC or the De Beers diamond industry. They are able to monitor each other's actions and punish defection.

Question 9

Which of the following is a difference between a pure strategy and a mixed strategy?

Accepted Answer

The answer of Which of the following is a difference...

Question 10

Repeated market interaction,particularly when there is no end to the interaction in sight,can

Accepted Answer

Repeated market interaction can lead to changes in the dominant strategic equilibrium if one or both players adjust their strategies over time based on their experiences and outcomes. This can result in a shift towards a new equilibrium or a mixed strategy, depending on the specific circumstances. Option B is not always true as changes can occur over time. Option C is not necessarily true as both players have the ability to adjust their strategies in repeated interactions. Option D is too vague and does not accurately reflect the potential outcomes of repeated market interaction.

Question 11

As GMB and VolgaBus compete,GMB selects a new and superior brake technology.VolgaBus prefers a different brake technology,but feels trapped into selecting the same one used by GMB.This is due to

Accepted Answer

This scenario is an example of first-mover advantage, where GMB, by being the first to adopt a new and superior brake technology, influences the market and competitors' choices, leading VolgaBus to feel compelled to adopt the same technology despite preferring a different one.

Question 12

As GMB moves to select a new passive restraint safety system for its buses,it finds that its competitor,VolgaBus,opposes the move with an alternative technology.GMB must now evaluate its strategy and determine whether

Accepted Answer

GMB should evaluate the credibility and effectiveness of VolgaBus's alternative technology before making a final decision. It is important to consider all options and choose the best one for the safety of the passengers.

Question 13

Actions that are taken to influence the beliefs or actions of rivals in favorable ways are

Accepted Answer

The actions mentioned in the question are strategic moves, which are taken with the aim of influencing the beliefs or actions of rivals in favorable ways. Pure and mixed strategies refer to the use of specific tactics and combinations of tactics, respectively, to achieve a particular outcome. Secure strategies are those that are designed to minimize risk and protect against potential losses, rather than to influence the behavior of rivals. Therefore, the best choice is C.

Question 14

Walmart built the base of its retailing market power in small cities and towns.In most of those towns,the size of the marketplace is so small that only one large retailer can successfully exist.This resulted in

Accepted Answer

Walmart's success in small cities and towns was due to their first-mover advantage. They were the first large retailer to enter these markets, which gave them a significant competitive edge over any potential competitors. Walmart was able to establish themselves as the dominant player in these markets, building up their retailing market power, and securing a strong position in these areas. This strategy allowed Walmart to expand its market share in the retail industry, cementing their place as a retail giant.

Question 15

Risk-averse managers often select a secure strategy that provides the

Accepted Answer

Risk-averse managers prefer strategies that ensure the highest payoff among the worst-case scenarios, minimizing potential losses.

Quiz 9: Economics of Strategy: Game Theory

Though Nash games are noncooperative,a cooperative outcome is more likely if

A display of a game in a tree diagram with nodes for every move by the players is a(n)

Higher discount rates imply that

If a strategic move is credible,it is likely to

The process of looking at the final outcome and then reasoning back to initial decisions is called

We have two players,A and B,where A moves first and can go L or R,and B moves next and can go T,B,or R.A moves again and can go L,R,or M.The payoffs are decided after this.The best approach to solve such games is through

Though Nash games are noncooperative,a cooperative outcome is more likely if

Though Nash games are noncooperative,a cooperative outcome is more likely if

Which of the following is a difference between a pure strategy and a mixed strategy?

Repeated market interaction,particularly when there is no end to the interaction in sight,can

As GMB and VolgaBus compete,GMB selects a new and superior brake technology.VolgaBus prefers a different brake technology,but feels trapped into selecting the same one used by GMB.This is due to

As GMB moves to select a new passive restraint safety system for its buses,it finds that its competitor,VolgaBus,opposes the move with an alternative technology.GMB must now evaluate its strategy and determine whether

Actions that are taken to influence the beliefs or actions of rivals in favorable ways are

Walmart built the base of its retailing market power in small cities and towns.In most of those towns,the size of the marketplace is so small that only one large retailer can successfully exist.This resulted in

Risk-averse managers often select a secure strategy that provides the