Chapter 20, Game Theory, Strategic Decision Making, and Behavioral Economics Video Solutions, Economics

Problem 1

Define the prisoner's dilemma game. $(L O 20-1)$
a. What assumptions lead to the dilemma?
b. What creates the possibility of escaping it?
c. What does the standard model say about your answer to $b$ ? What does experimental economics say?

Dave Kratz

Numerade Educator

01:13

Problem 2

Dave Kratz

Numerade Educator

05:28

Problem 3

Is the solution to the prisoner's dilemma game a Nash equilibrium? Why? $(L O 20-1)$

Manasvee Singh

Numerade Educator

02:06

Problem 4

If a player does not have a dominant strategy, can the game still have a Nash equilibrium? $(L O 20-1)$

Kaylee Mcclellan

Numerade Educator

02:15

Problem 5

Two firms have entered an agreement to set prices. The accompanying payoff matrix shows profit for each firm in a market depending upon whether the firm cheats on the agreement by reducing its prices. $\quad(L O 20-1)$
a. What is the dominant strategy for each firm, if any?
b. What is the Nash equilibrium, if any?

Niamat Khuda

Numerade Educator

02:07

Problem 6

Two people are arrested and charged with the same crime. Each is given the opportunity to accuse the other of the crime. The payoff matrix shows how much time each will serve depending on who rats out whom. $(L O 20-1)$
a. What is the dominant strategy for each, if any?
b. What is the Nash equilibrium, if any?

Kaylee Mcclellan

Numerade Educator

06:42

Problem 7

For each of the following, state whether Player $\mathrm{A}$ and Player $\mathrm{B}$ have a dominant strategy and, if so, what each player's dominant strategy is. $(L O 20-1)$

Manasvee Singh

Numerade Educator

03:05

Problem 8

Would the results of the prisoner's dilemma game be different if it were a sequential rather than a simultaneous game? $(L O 20-2)$

Rashmi Sinha

Numerade Educator

01:48

Problem 9

State whether each of the following situations is a simultaneous or sequential game. Explain your answer. $(L O 20-2)$
a. A congressional vote by roll call.
b. The ultimatum game.
c. The Civil War.
d. The segregation game (requires reading the box "The Segregation Game and Agent-Based Modeling").

Mahipal Kumawat

Numerade Educator

01:53

Problem 10

Can a player have a rollback strategy in a simultaneous move game? $(L O 20-2)$

Aidan Mcnabb

Numerade Educator

05:28

Problem 11

True or false? If a game has a Nash equilibrium, that equilibrium will be the equilibrium that we expect to observe in the real world. $(L O 20-2)$

Manasvee Singh

Numerade Educator

01:32

Problem 12

Why might the multiple-play ultimatum game have a different result than the single-play ultimatum game? $(L O 20-2)$

Jessica Waggener

Numerade Educator

01:16

Problem 13

Why do sellers generally prefer a Vickrey auction to a regular sealed bid if sellers don't receive the highest bid in the Vickrey auction? $(L O 20-3)$

Kaylee Mcclellan

Numerade Educator

02:47

Problem 14

Say that you are bidding in a sealed-bid auction and that you really want the item being auctioned. Winning it would be worth $\$ 250$ to you. Say you expect the nexthighest bidder to bid $\$ 100 .(L O 20-3)$
a. In a standard "highest-bid" auction, what bid would a rational person make?
b. In a Vickrey auction, what bid would he make?

Kari Hasz

Numerade Educator

02:00

Problem 15

When consumers were given the opportunity to select a package of ground beef labeled " $75 \%$ lean" or a package of ground beef labeled "25\% fat," most consumers chose "75\% lean." Why? What concept from the chapter does this illustrate? $(L O 20-4)$

Leonardo Filgueiras

Numerade Educator

05:29

Problem 16

Why does it take just a few people to act rationally for the standard model to hold? $(L O 20-4)$

Temi Ajayi

Numerade Educator