Practice Questions
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In the context of game theory, which of the following scenarios represents a Pareto efficient outcome?
A Pareto efficient outcome means both players are getting the best they can from the situation. Other options are incorrect because This option sugges...
In a sequential game where two players have to decide their strategies, how does backward induction help in finding the Nash equilibrium?
Backward induction helps players think ahead. Other options are incorrect because Some might think backward induction removes weak strategies; This op...
In the context of game theory, which of the following best describes the primary difference between non-zero-sum games and cooperative games?
Non-zero-sum games allow for different outcomes where players can both win or lose. Other options are incorrect because This answer suggests that coop...
In a cooperative game represented in an extensive form, how do players typically determine their optimal strategies when they can form binding agreements?
Players work together to find the best way to share rewards. Other options are incorrect because Some might think players only care about their own sc...
In a strategic game involving two players, if one player has a dominant strategy, what can be inferred about the nature of the game being played, particularly in relation to zero-sum and non-zero-sum games?
A dominant strategy means one player has a best choice, no matter what the other does. Other options are incorrect because Some might think a dominant...
In a game involving two players, Player A and Player B, if both players choose strategies that result in no player having an incentive to unilaterally change their strategy, what is this situation called?
This situation is called a Nash equilibrium. Other options are incorrect because A dominant strategy is one that is best for a player no matter what t...
In a game where two players can choose either to cooperate or defect, which of the following scenarios illustrates a dominant strategy for both players?
When one player defects and the other cooperates, the defector gets a big reward. Other options are incorrect because Some might think that cooperatin...
In a zero-sum game, if one player's gain is exactly equal to the losses of another player, this type of game is best described as:
In a competitive game, one player's win means another player's loss. Other options are incorrect because Some might think cooperative means players wo...
In the context of Game Theory, which of the following scenarios best exemplifies a situation where individuals face a dilemma between cooperation and self-interest, ultimately leading to a suboptimal outcome?
In this case, two businesses want to make money. Other options are incorrect because This option shows people working together for a common goal; Here...
In a scenario resembling the Prisoner's Dilemma, why might two rational players choose not to cooperate, despite mutual benefits?
Players might not trust each other. Other options are incorrect because This idea suggests that working together always leads to better results; This ...
Cooperation in Game Theory is to the Payoff Matrix as: Communication in a team is to ?
Team dynamics are how team members interact and work together. Other options are incorrect because Some might think team goals are the same as communi...
Two competing coffee shops, Cafe A and Cafe B, are deciding whether to offer a discount on their drinks. If both shops decide to offer a discount, they will each make a modest profit. If neither offers a discount, they both maintain higher profits. However, if one offers a discount while the other does not, the discounting shop will attract more customers and significantly increase its profit while the other will lose customers. How does this scenario illustrate the principles of Game Theory?
The shops will likely choose what benefits them individually. Other options are incorrect because This suggests both shops will work together; This im...
In a typical Prisoner's Dilemma scenario, what outcome is most likely if both players act in their self-interest?
When both players only think about themselves, they both end up with the worst result. Other options are incorrect because Some might think both playe...
In the context of Game Theory, the scenario where two individuals choose between cooperation and self-interest, often leading to a suboptimal outcome, is best illustrated by the _____ game.
The Prisoner's Dilemma shows how two people can end up worse off if they act selfishly instead of working together. Other options are incorrect becaus...
In a scenario where two companies engage in a price war, resulting in lower profits for both, what underlying cause can be attributed to this outcome based on Game Theory principles?
The companies are focused on their own profits. Other options are incorrect because This suggests the companies are working together; This implies tha...
Arrange the following steps in the process of using Game Theory to analyze a strategic decision: A) Identify the players involved, B) Determine the payoffs for each possible action, C) Analyze the potential strategies and outcomes, D) Make a decision based on the optimal strategy.
First, you need to know who is involved. Other options are incorrect because This order starts with payoffs, but you can't know them without knowing t...
Which of the following statements accurately reflect key principles of Game Theory? (Select all that apply)
Other options are incorrect because Many think Game Theory only looks at competition; Some believe the Payoff Matrix is not useful....
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