Chapter Questions
The prisoners’ dilemma is an example ofa. a sequential game.b. a simultaneous game.c. a shirking game.d. a dating game
Nash equilibriuma. is where one player maximizes his payoffand the other doesn’t.b. is where each player maximizes his ownpayoff given the action of the other player.c. is where both players are maximizingtheir total payoff.
d. is a unique prediction of the likely out-come of a game.
The Nash equilibrium for both stores isa. for Megastore to advertise and forSuperstore to advertise.b. for Megastore to advertise and forSuperstore not to advertise.c. for Megastore not to advertise and forSuperstore to advertise.d. for Megastore not to advertise and forSuperstore not to advertise.
When the game does reach the Nash Equilib-rium, the payoffs for both stores will be
a. Megastore $95 and Superstore $80.b. Megastore $305 and Superstore $55.c. Megastore $65 and Superstore $285.d. Megastore $165 and Superstore $115.
If collusion were not illegal, then it would bemore optimala. for Megastore to advertise and forSuperstore to advertise.b. for Megastore to advertise and forSuperstore not to advertise.c. for Megastore not to advertise and forSuperstore to advertise.d. for Megastore not to advertise and forSuperstore not to advertise.
Prisoners’ dilemmas show thata. rational choices can lead to bad outcomes.b. rational choices can lead to good outcomes.c. there are no ways to learn where thepitfalls lie.d. None of the above
In repeated games, all of the below make iteasier to get out of bad situations excepta. be nice, no first strikes.b. respond immediately to rivals.c. punish competitors as much as you canwhen they don’t cooperate.d. make sure your competitors can easilyinterpret your actions.
If this game is played once, thena. firm A will charge a low price, and firm Bwill charge a low price.b. firm A will charge a high price, and firmB will charge a low price.c. firm A will charge a low price, and firm Bwill charge a high price.d. firm A will charge a high price, and firmB will charge a high price.
Suppose the game is infinitely repeated. Whatstrategies will each firm likely utilize?a. Firm A will charge a low price, and firmB will charge a low price.b. Firm A will charge a high price, and firmB will charge a low price.c. Firm A will charge a low price, and firmB will charge a high price.d. Firm A will charge a high price, and firmB will charge a high price.
You, a real-estate developer, own a piece of
land in Nassau, Bahamas, next to an equal-size piece of land owned by a competitor.
Both of you have the choice of building acasino or a hotel. Your payoffs are asfollows: