Chapter 4 - Social interactions

Question 1

Game Theory

Answer 1

The analysis of strategies for dealing with competitive situations where the outcome of a participants choice of action depends critically on the actions of other participants.

Question 2

Best Response

Answer 2

I’m game theory, the strategy that will yield the highest payoff, given the strategy the other person selects.

Question 3

Dominant Strategy Equilibrium

Answer 3

An outcome of a game in which each player plays his or her dominant strategy.

Question 4

Social Dilemma

Answer 4

Where actions taken independently by individuals in pursuit of their own private objectives results in an outcome which is inferior to some other outcome that is feasible and which could have occurred had people acted together rather than as individuals.

Question 5

Altruism

Answer 5

The willingness to bear a cost in order to benefit someone else.

Question 6

Reciprocity

Answer 6

A preference to be kind or help others who are kind and helpful. And to withhold help and kindness from people who are not helpful or kind.

Question 7

Inequality Aversion

Answer 7

A person of this type may care about their own income or wealth, but also prefers an economy with smaller economic differences among its members.

Question 8

Nash Equilibrium

Answer 8

A situation in which each party is doing the best it can , given what each of the others is doing.

Question 9

Public Goods

Answer 9

A good for which the use by one person does not reduce its availability to others.

Question 10

Prisoners’ Dilemma

Answer 10

A game
In which the payoffs in the dominant strategy Equilibrium are lower for each player, and also lower in total than had neither played played the dominant strategy.