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Chapter 15
Game Theory Models of Pricing
217. A common assumption about the players in a game is that
a. neither player knows the payoff matrix.
b. the players have different information about the payoff matrix.
c. only one of the players pursues a rational strategy.
* d. the specific identity of the players is irrelevant to the play of the game.
218. In a zero-sum game
* a. what one player wins, the other loses.
b. the sum of each player ’s winnings if the game is played many times must be zero.
c. the game is fair— each person has an equal chance of winning.
d. long-run profits must be zero.
219. The Prisoners ’ Dilemma is not a constant sum game because
* a. some outcomes are better than others for both players.
b. the prisoners ’ sentences are necessarily non-zero.
c. the game does not have a Nash equilibrium.
d. the sum of the prisoners ’ sentences is non-zero.
220. The twin non-confess strategy choice in the Prisoners ’ dilemma can be described as
a. non-Pareto optimal and unstable.
* b. Pareto optimal and unstable.
c. non-Pareto optimal and stable.
d. Pareto optimal and stable.
221. A “credible ” threat is a threat of an action that a player
a. makes in a believable way.
b. is committed to carry out.
c. cannot retract.
* d. would be willing to undertake if in a position to do so.
222. A subgame perfect equilibrium is a Nash equilibrium that
a. cannot persist through several periods.
* b. involves only credible threats.
c. consists only of dominant strategies.
d. is unique.
223. The primary reason that trigger-type stra
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