Practice Questions
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In game tree analysis, which of the following best describes the outcome when player A has a dominant strategy over player B in a simultaneous game?
A’s dominant strategy is the best choice no matter what B does. Other options are incorrect because The mistake is thinking a dominant strategy guaran...
In a market where one firm has more information about product quality than its competitors, which strategy can the better-informed firm use to signal its quality effectively?
A refund promise shows the firm trusts its product. Other options are incorrect because Lowering the price may attract buyers, but it does not prove t...
In a market where two companies compete on pricing, if neither company can benefit from changing their prices while the other's price remains unchanged, which concept is illustrated in this scenario?
When each company’s best price depends on the other’s price, neither wants to change. Other options are incorrect because Some think a strategy that a...
In a zero-sum game scenario, two players must choose their strategies simultaneously. If Player A chooses to signal a strong position while Player B interprets that signal as weak, what is the likely outcome regarding their strategies at Nash equilibrium?
When each player sees the other's signal, they change their own move to get the best possible result. Other options are incorrect because The idea tha...
In a highly competitive market where firms face information asymmetry, which combination of strategies is most effective for a new entrant to succeed against established competitors?
Choosing a unique product or service and learning about rivals helps the newcomer stand out. Other options are incorrect because Misconception: cost l...
In a two-player strategic game, Player A decides to play defensively, focusing on countering Player B's potential moves. Which of the following categories best describes this strategy, and why does it fit that classification?
Player A chooses moves that stop Player B from gaining an advantage. Other options are incorrect because Offensive strategy means actively trying to w...
In a two-player game, if Player A anticipates Player B's response to their move, which strategy best exemplifies backward induction?
Player A looks ahead to see how Player B will react. Other options are incorrect because Choosing a move at random ignores what the opponent will do; ...
In a competitive market where two companies, A and B, are deciding whether to invest in a new product line, Company A can either invest heavily (high commitment) or cautiously (low commitment). Company B, observing Company A's decision, will choose a strategy based on that. If Company A invests heavily, Company B can either match that investment or opt for a different strategy. How should Company A decide its strategy using backward induction, considering the potential responses from Company B?
If Company A puts in a big investment, it shows a strong commitment. Other options are incorrect because This answer assumes that both firms will auto...
In a competitive game scenario where two players must decide their next move while anticipating each other's responses, which strategy best utilizes backward induction for optimal decision-making?
Backward induction means looking at the end of the game first. Other options are incorrect because Choosing only a defensive move assumes you can stop...
Defensive strategies in game theory are to competition as A: B is to C: ?
Defensive tactics keep a player safe from losing. Other options are incorrect because The aggressive style focuses on attacking, not on protecting; Th...
Arrange the steps a player should take in a game theory scenario using backward induction to maximize their strategy: A) Analyze potential outcomes and payoffs, B) Decide on the current move based on the analysis, C) Observe the opponent's previous moves, D) Make an informed strategy choice based on the observed responses.
First the player watches what the opponent did before. Other options are incorrect because This answer starts with analysis before seeing the opponent...
In a two-player game scenario, which of the following strategies can effectively leverage backward induction to anticipate an opponent's moves? Select all that apply.
Backward induction means you look at the last move first, then work backwards. Other options are incorrect because Choosing moves randomly ignores the...
In game theory, when a player determines their strategy by considering the possible responses from their opponent at the end of a game, they are utilizing __________.
Backward induction means you start at the game’s end and work backwards. Other options are incorrect because Forward induction looks forward from past...
If a player chooses to play defensively in a game, what is the most likely reason for this decision?
Playing defensively lets a player see what the opponent might do next. Other options are incorrect because Defense is not about losing; Even defensive...
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