Q01 Q01 Q01

Robert and Rosalie are deciding whether to request fish or chicken at a wedding that they will attend. If they order different meals, they can try each of the dishes by sharing. Their payoffs in terms of their happiness are as follows. There is a pure-strategy Nash equilibrium at ____.

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Q07 Q07 Q07

(Table: Lemonade) Andrei and Sonya operate lemonade stands in the same neighborhood. Payoffs are in quarters . The kids have formed an agreement to restrict output. They are playing an infinitely repeated game in which output decisions must be made every period and both of them are using tit-for-tat trigger strategies. If the discount rate is d = 0.4, then the players ____.

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Multiple Choice

Q08 Q08 Q08

(Table: Firms A and B I) The payoffs represent profits measured in thousands of dollars. In this infinitely repeated game, Firm A and Firm B are both using grim trigger strategies; they agree to charge a high price in period one. If Firm A has a change of heart and decides not to charge a high price in period one, what is Firm A's expected payoff from cheating? Assume that d = 0.9.

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Q09 Q09 Q09

(Table: TriStar Pictures and New Line Cinema I) Payoffs represent profits in millions of dollars. In this simultaneous game, TriStar and New Line Cinema both decide the genre of their summer movie release. TriStar prefers to release a superhero movie and New Line Cinema releases a comedy. TriStar enters into an irrevocable contract that will provide penalty payments to theater chains if it releases a summer comedy. These penalty payments serve as a credible commitment to TriStar's desire to release a superhero movie. How large do these penalty payments have to be to convince New Line Cinema that TriStar will release a superhero movie?

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Q11 Q11 Q11

Dennis and Denise are trying to decide whether to go hiking or biking this weekend. Depending on their choices, they might go together or they might go apart. Their payoffs in terms of their happiness are as follows. There exists a mixed-strategy Nash equilibrium when Dennis chooses hiking with a probability of ____.

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Multiple Choice

Q16 Q16 Q16

(Table: Polaris and Yamaha I) The payoffs represent profits in millions of dollars. Suppose that this simultaneous-move game is played once in each period for three periods. In period one, the outcome will be _____, and in period two, the outcome will be _____.

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Q20 Q20 Q20

Dennis and Denise are trying to decide whether to go hiking or biking this weekend. Depending on their choices, they might go together or they might go apart. Their payoffs in terms of their happiness are as follows. There exists a mixed-strategy Nash equilibrium when Denise chooses biking with a probability of ____.

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Multiple Choice

Q24 Q24 Q24

(Table: Lemonade) Andrei and Sonya operate lemonade stands in the same neighborhood. Payoffs are in quarters . The kids have formed an agreement to restrict output. They are playing an infinitely repeated game in which output decisions must be made every period and both of them are using tit-for-tat trigger strategies. If the discount rate is d = 0.1, then the players ____.

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Multiple Choice

Q26 Q26 Q26

(Table: Players 1 and 2 III) Payoffs represent profits in millions of dollars. Which of the following statements is (are) TRUE?
I) In a simultaneous game that is played only once, the Nash equilibria are (80 , 100) and (70 , 40).
II) In a sequential game in which Player 1 moves first, the Nash equilibrium is (100 , 90).
III) In a simultaneous game that is played only once, the dominated strategy for Player 1 is Middle.

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Multiple Choice

Q28 Q28 Q28

Dennis and Denise are trying to decide whether to go hiking or biking this weekend. Depending on their choices, they might go together or they might go apart. Their payoffs in terms of their happiness are as follows. There exists a mixed-strategy Nash equilibrium when Dennis chooses biking with a probability of ____.

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Multiple Choice

Q30 Q30 Q30

Dennis and Denise are trying to decide whether to go hiking or biking this weekend. Depending on their choices, they might go together or they might go apart. Their payoffs in terms of their happiness are as follows. There is a pure-strategy Nash equilibrium at ____.

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Multiple Choice

Q34 Q34 Q34

Consider a simultaneous game for two players. Each player has a choice between two strategies, Friend and Foe. If both players play Friend, each wins $1,000. If both play Foe, they win nothing. If one plays Foe and the other plays Friend, the Foe wins $2,000 and the Friend wins nothing. Which of the following statements is (are) TRUE?
I) This game has a mixed-strategy equilibrium.
II) This game has a pure-strategy equilibrium.
III) The Nash equilibrium is for both players to play Friend.

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Multiple Choice

Q41 Q41 Q41

(Table: Firms A and B I) The payoffs represent profits measured in thousands of dollars. In this infinitely repeated game, Firm A and Firm B are both using grim trigger strategies; they agree to charge a high price in period one. If Firm A charges a high price for all periods, what is its expected payoff? Assume that d = 0.9.

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Q42 Q42 Q42

(Table: Firms A and B II) The payoffs represent profits in millions of dollars. In this infinitely repeated game, Firm A and Firm B agree to cooperate and not offer warranty coverage. Each firm follows a grim trigger strategy. At what value of d is Firm A indifferent between keeping the agreement with Firm B and cheating on it?

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Q47 Q47 Q47

(Table: Detroit Art School and Motor City Art School I) The payoffs represent profits measured in thousands of dollars. In this infinitely repeated game, the two schools agree to cooperate and not offer financial aid. Each school follows a grim trigger strategy. At what value of d is the Motor City Art School indifferent between upholding and cheating on the agreement?

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Multiple Choice

Q50 Q50 Q50

At one time, tobacco companies vigorously fought lawsuits by their current and former customers, even though the cost of defending the lawsuits exceeded the amount of money demanded by the smokers. What type of strategic behavior were tobacco companies using?

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Multiple Choice

Q53 Q53 Q53

(Table: Simultaneous Game II) Tatyana and Lena have been arrested for a crime. In this simultaneous game, the payoffs represent years in jail. It should be noted that years in jail are something that someone would like to avoid or are considered negatively. Lena's dominated strategy is ______, while Tatyana's dominated strategy is _________.

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Multiple Choice

Q57 Q57 Q57

Robert and Rosalie are deciding whether to request fish or chicken at a wedding that they will attend. If they order different meals, they can try each of the dishes by sharing. Their payoffs in terms of their happiness are as follows. There is a pure-strategy Nash equilibrium at ____.

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Multiple Choice

Q63 Q63 Q63

(Table: Firms A and B X) Two firms have formed an agreement to restrict output. They are playing an infinitely repeated game in which output decisions must be made every period. Both firms are using grim trigger strategies.
If d (discount rate) = 0.80, Firm B's expected payoff from following the agreement is ____.

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Multiple Choice

Q66 Q66 Q66

Suppose that Fizzy Soda and Townie Soda must choose whether to advertise their soft drinks. In a Nash equilibrium, both firms choose to advertise and earn weekly profits of $80,000. Which of the following statements is (are) TRUE?
I) Neither firm has incentive to change its advertising strategy, given the strategy choice of its rival.
II) If Townie Soda decided to stop advertising, its profits would fall below $80,000.
III) If both firms stopped advertising, it is possible that each firm could earn profits greater than $80,000.

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Q72 Q72 Q72

(Table: Players 1 and 2 I) The table shows the payoffs from the game rock-paper-scissors. Which of the following statements is (are) TRUE?
I) There is no pure-strategy Nash equilibrium.
II) The Nash equilibria are (rock, rock), (paper, paper), and (scissors, scissors).
III) The mixed-strategy Nash equilibrium is for each player to randomly select each strategy one-third of the time.

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Multiple Choice

Q77 Q77 Q77

(Table: Lemonade) Andrei and Sonya operate lemonade stands in the same neighborhood. Payoffs are in quarters . The kids have formed an agreement to restrict output. They are playing an infinitely repeated game in which output decisions must be made every period and both of them are using tit-for-tat trigger strategies. If the discount rate is d = 0.33, then the players ____.

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Multiple Choice

Q78 Q78 Q78

(Table: Lemonade) Andrei and Sonya operate lemonade stands in the same neighborhood. Payoffs are in quarters . The kids have formed an agreement to restrict output. They are playing an infinitely repeated game in which output decisions must be made every period and both of them are using tit-for-tat trigger strategies. If the discount rate is d = 0.2, then the players ____.

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Multiple Choice

Q89 Q89 Q89

(Table: Firms A and B IX) Two firms have formed an agreement to restrict output. They are playing an infinitely repeated game in which output decisions must be made every period. Both firms are using a grim trigger strategy. The value of d (discount rate) = ____ would make Firm A indifferent between keeping the agreement or cheating on the agreement.

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Multiple Choice

Q95 Q95 Q95

(Figure: Feely Mattress and Mealy Mattress I) In the figure, payoffs are profits in millions of dollars. Suppose that Feely cannot develop an anti-bedbug mattress because of Mealy's patented technology. Should Mealy develop and release its anti-bedbug mattress?

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Q99 Q99 Q99

Dennis and Denise are trying to decide whether to go hiking or biking this weekend. Depending on their choices, they might go together or they might go apart. Their payoffs in terms of their happiness are as follows. There exists a mixed-strategy Nash equilibrium when Denise chooses hiking with a probability of ____.

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Multiple Choice

Q102 Q102 Q102

(Table: Firms A and B I) The payoffs represent profits in thousands of dollars. Suppose that two firms are playing an infinitely repeated game. In period 6, Firm B decides it will no longer cooperate with Firm A. If Firm A is using a grim trigger strategy, Firm A will choose:

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Multiple Choice

Q105 Q105 Q105

(Table: Lemonade) Andrei and Sonya operate lemonade stands in the same neighborhood. Payoffs are in quarters . The kids have formed an agreement to restrict output. They are playing an infinitely repeated game in which output decisions must be made every period and both of them are using tit-for-tat trigger strategies. If the discount rate is d = 0.25, then the players ____.

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Multiple Choice

Q115 Q115 Q115

(Table: Firms A and B X) Two firms have formed an agreement to restrict output. They are playing an infinitely repeated game in which output decisions must be made every period. Both firms are using grim trigger strategies.
If d (discount rate) = 0.80, Firm B's expected payoff from cheating on the agreement is ____.

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Q116 Q116 Q116

Suppose that Galina and Vlada are playing a finitely repeated flag game. The game starts with seven flags in the ground, and the players take turns removing the flags. A player must remove either one, two, or three flags per turn. The player who takes the last flag out of the ground, whether it is by itself or in a group, wins the game. Assume that Galina decides first on how many flags to remove. How many flags should Galina remove on her first turn to guarantee that she will win the game? Use backward induction.

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Q118 Q118 Q118

(Table: Players A and B IV) Payoffs represent profits in millions of dollars. Which of the following statements is (are) TRUE?
I) In a simultaneous game that is played only once, the Nash equilibrium is (0 , 0).
II) In a sequential game in which Player A moves first, the Nash equilibrium is (6 , 0).
III) In the sequential game, Player A has a first-mover advantage.

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Q120 Q120 Q120

Big Earth and District 13 are two producers of neodymium, a rare earth. If they agree to restrict output, each firm earns $100 million per year. If both firms expand output, each firm earns $50 million per year. If one firm restricts output and the other firm expands output, the firm that expands output earns $150 million per year and the other firm earns only $30 million per year. Assume that Big Earth and District 13 will compete infinitely, with each firm following a grim trigger strategy. Which of the following statements is TRUE?

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Multiple Choice

Q125 Q125 Q125

Dennis and Denise are trying to decide whether to go hiking or biking this weekend. Depending on their choices, they might go together or they might go apart. Their payoffs in terms of their happiness are as follows. There is a pure-strategy Nash equilibrium at ____.

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Multiple Choice

Q128 Q128 Q128

(Table: Players A and B III) The payoffs represent profits in thousands of dollars. Which of the following statements is (are) TRUE?
I) In a simultaneous game that is played only once, the Nash equilibrium is (20 , 20).
II) In a sequential game in which Player A moves first, the Nash equilibrium is (18 , 18).
III) In the sequential game, Player A has a first-mover advantage.

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Multiple Choice

Q133 Q133 Q133

(Table: Jack and Jill I)
a. What are Jack's strategies?
b. What are Jill's strategies?
c. If Jack chooses to climb the hill and Jill doesn't bring the pail, what are the payoffs to Jack and Jill?
d. If Jack chooses to not climb the hill and Jill brings the pail, what are the payoffs to Jack and Jill?

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Essay

Q136 Q136 Q136

The table contains letters that represent payoff values. If the strategy combination (B , Y) is a Nash equilibrium, then prove that the strategy combination (A , X) must also be a Nash equilibrium assuming there are no dominant strategies. Assume that no two letters will take on the same value.

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Q140 Q140 Q140

Consider a game in which a person called the proposer is given $200. The proposer must choose to split the money with a person called the responder. The money must be split in one of three ways:
(1) Proposer keeps $199; responder gets $1.
(2) Proposer keeps $100; responder gets $100.
(3) Proposer keeps $50; responder gets $150.
The responder can either accept or reject the proposer's offer. If the responder rejects the offer, both players get nothing. Illustrate this game in extensive form. Using backward induction, what is the outcome of this game?

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Q141 Q141 Q141

Consider the following game. Either of the two players can choose to stop the game or continue it at any point. If a player continues the game, she loses $1, and $2 is added to her opponent's payoff. The game is played for 10 rounds. Construct the decision tree for this game.

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Q143 Q143 Q143

Bob and Rosalie are deciding whether to request fish or chicken at a wedding that they will attend. If they order different meals, they can try each of the dishes by sharing. Their payoffs in terms of their happiness are as follows.
a. What are the pure-strategy Nash equilibria if any?
b. What is the mixed-strategy Nash equilibrium?

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Q144 Q144 Q144

Construct the decision tree for the following game. There are two players; each may choose one, two, or three straws at each turn. The game begins with a total of five straws. The object of the game is to take the last straw or straws. Assume that a player either wins $1 or loses $1. Find all Nash equilibria.

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Q150 Q150 Q150

(Table: Firms 1 and 2 III) Payoffs represent profits in millions of dollars.
a. What is Firm 2's dominant strategy?
b. What is Firm 2's dominated strategy?
c. At what values of x will Firm 1's dominant strategy be down?
d. If x = 7, what is Firm 1's dominated strategy?

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Q152 Q152 Q152

Suppose that you are playing an infinitely repeated game. You and your opponent agree to restrict output each period to maximize discounted profit. For each period, you and your opponent have to touch a button on a computer screen that selects the level of output, namely, restricted or unrestricted output. Once the button is touched, the output is locked in for the period and cannot be changed. If your opponent has a shaky hand, would you rather use a grim trigger strategy or a tit-for-tat strategy?

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Q153 Q153 Q153

Imagine two friends, Marcus and Marty, who are providing goods for a bake sale. They can take either brownies or cookies, and payoffs (the profits that they will split) are as given in the table:
a. What are the pure-strategy Nash equilibria if any?
b. What is the mixed-strategy Nash equilibrium?

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Q155 Q155 Q155

Two boxers, Brutus and Floyd, are training to fight each other. Each boxer is considering whether to take steroids to improve his chance of winning the fight. Assume that the boxing association does not have a policy against steroid use. If both boxers take steroids, neither has an advantage and the payoffs (net of health costs) are $3 million per boxer. If both boxers don't take steroids, the payoffs are $4 million per boxer. If one boxer takes steroids and the other doesn't, the boxer taking the steroids receives a payoff of $6 million (net of health costs) and the other boxer receives a $1 million payoff.
a. Represent the preceding information in a normal-form game.
b. What is the Nash equilibrium?
c. Would the boxers be better off if the boxing association banned steroids and tested each boxer for steroids prior to a fight?

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Essay

Q159 Q159 Q159

(Table: Firms 1 and 2 IV) Payoffs represent profits in millions of dollars.
a. If Firm 1 chooses up, what is the best strategy for Firm 2?
b. If Firm 2 chooses left, what is the best strategy for Firm 1?
c. If Firm 1 chooses down, what is the best strategy for Firm 2?
d. If Firm 2 chooses right, what is the best strategy for Firm 1?
e. What is the game's Nash equilibrium?

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Essay

Q165 Q165 Q165

(Table: Firms A and B IX) Two firms have formed an agreement to restrict output.
They are playing an infinitely repeated game in which output decisions must be made every period. Both firms are using a grim trigger strategy. At what value of d (discount rate) would Firm A be indifferent about keeping the agreement or cheating on the agreement?

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Q170 Q170 Q170

Nancy and Denise are trying to decide whether to go hiking or biking this weekend. Depending on their choices, they might go together and they might go apart. Their payoffs in terms of their happiness are as follows.
a. What are the pure-strategy Nash equilibria if any?
b. What is the mixed-strategy Nash equilibrium?

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