One interesting feature of a prisoner’s dilemma game is that A) non-cooperative behavior leads to lower payoffs than cooperative behavior. B) it was only valid before the industrial revolution. C) individuals behave irrationally when they behave non-cooperatively. D) cooperative behavior leads to lower payoffs than non-cooperative behavior. ANSWER A
A photograph processing machine company requiring customers who buy a processing machine to purchase chemicals and photographic paper from it is an example of A) bundling. B) a requirement tie-in sale. C) nonlinear pricing. D) two-part pricing. ANSWER B
One way to ensure cooperation in an infinitely repeated simultaneous game is A) to always play the dominant strategy. B) to punish the player that reneges on agreements. C) to never punish any player. D) to always punish all players. ANSWER B
Which of the following is a dynamic game? A) rock-paper-scissors B) flipping pennies C) chess D) the card game “war” ANSWER C
Why don’t we see firms tie in the sales of fish filets with the sales of pencils? A) because the demands for these two goods are positively correlated B) because the demands for these two goods are negatively correlated C) because the demands for these two goods are independent D) It violates the Clean Food […]
A trigger strategy A) is always a dominant strategy. B) is used to punish the player that reneges on agreements. C) is used to reward the player that never reneges on agreements. D) is a best response whenever all players cooperate. ANSWER B
Repeated games are conducive to A) explicit cooperation. B) tacit cooperation. C) corruption. D) failing to have a Nash equilibrium. ANSWER B
A firm that holds a monopoly in both goods stands to gain from a tie-in sale. A) True. B) False. C) True, which is why anti-trust laws exist. D) False, there are no dual monopolies. ANSWER B
What is the counter-intuitive solution to a mixed strategy? A) Player A makes Player B indifferent between its strategy choices. B) Player A makes itself indifferent between its strategy choices. C) Player A changes the rules of the game. D) There are no mixed strategies in most games. ANSWER A
Mutually Assured Destruction was a standing policy during the Cold War, in which the United States and the U.S.S.R. maintained and expanded nuclear arsenals beyond practical levels. What could explain such a phenomenon? A) insane public officials who were bent on world domination B) a prisoners’ dilemma C) a leader-follower type game D) tacit collusion […]
