A payoff matrix is a table that describes
the payoffs in a game for each possible combination
of strategies
A threat to take an action that is in the threatener's interest to carry out is known as _____.
Credible Threat
A _____ (one word) promise is a promise to take an action that is in the promiser's
Interest to carry out. credible
A standard prisoner's dilemma that confronts the same players repeatedly _____ _____ _____.
Repeated prisoner's dilemma
A strategy for the repeated prisoner's dilemma in which players cooperate on the first move and
then mimic their partner's last move on each successive move is known as ______-____-____.
Tit-for-tat
The three basic elements of a game are (select three):
- The players
-The strategies available to each player
-The payoffs each player receives
Commitment problems can be solved by altering people's: Psychological incentives and
material incentives
One that yields a higher payoff no matter what the other players in a game choose is known as
_____ _____. Dominant strategy
If a player has a dominant strategy, then any other strategy available to that player is
a
dominated strategy
Any combination of strategy choices in which each player's choice is his or her best choice,
given the other players' choices is known as _____ _____. Nash equilibrium
A prisoner's dilemma that confronts the same players not just once but many times is called a
_____ prisoner's dilemma. repeated
A diagram that describes the possible moves in a game in sequence and lists the payoffs that
correspond to each possible combination of moves is known as ______. Decision tree (or
game tree)
A promise to take action that is in the promiser's interest to keep is known as _____ _____.
Credible promise
Players face a _____ problem when they cannot achieve their goals because of an inability to
make credible threats and promises. commitment
A way of changing incentives so as to make otherwise empty threats or promises credible
Known as _______ _____ commitment device
A situation in which people cannot achieve their goals because of an inability to make credible
threats or promises are known as ________ ______ Commitment problem
True or false: Historically, cartel agreements have been easy to maintain. false
Cartel agreements have been difficult to maintain because participants are confronted with the
same economic incentives as found in a _____ ______.
prisoner's dilemma
A tit-for-tat strategy is a strategy for the repeated prisoner's dilemma in which players cooperate
on the first move and then
mimic their partners last move on each successive move
A commitment _____ changes incentives so as to make otherwise empty threats or promises
credible.
device
A situation in which people cannot achieve their goals because of an inability to make credible
threats or promises _____ _____.
commitment problem
A coalition of firms that agree to restrict output for the purpose of earning an economic profit is
known as _______,. cartel
The problem confronting oligopolists Who are trying to form a cartel is a classic illustration of
The prisoner's dilemma
Consider the decision tree to the right. Who has the second move in this game? Jones
A decision _____ is a diagram that describes the possible moves in a game in sequence and lists
the payoffs that correspond to each possible combination of moves.tree
A _____ is a coalition of firms that agrees to restrict output for the purpose of earning an
economic profit.
cartel
The diagram on the right is a Decision tree
A Nash equilibrium is any combination of strategy choices in which
each player's choice is
his or her best choice, given the other players' choices
A prisoner's dilemma is a game in which every player has a dominant strategy, and if each plays
the resulting payoffs are smaller than if each had played with a dominated strategy
Shouting at parties
may make everyone worse off, but is a dominant strategy for each
individual.
A dominant strategy is one that
yields a higher payoff no matter what the other players in
the game choose.
A firm in a cartel agreement has a strong incentive to undercut the prices of the other cartel
members.
In repeated prisoner's dilemmas, tit-for-tat strategies have been shown to be effective at limiting
defection in computer simulations but not real world cartel agreements
it is ______in a firm's best interest to offer a product that is similar those already being sold by
its competitors.
sometimes
In a sequential game, the player who moves last ______ has a strategic advantage sometimes
In order to attract as many customers as possible, monopolistic competitors like gas stations and
convenience stores Often cluster geographically
Think about it: When have you seen a Walgreens without a CVS across the street or further
down on the same street? Almost never.
Leaving your laptop at work to avoid working from home in the evening is example of a
commitment device
The player who moves first in a sequential game _______ a strategic advantage. May or may
not