Final Exam

Question 1

Dominant Strategy

Answer 1

the strategy in a game that produces better results irrespective of the strategy chosen by one’s opponent

Question 2

Nash Equilibrium

Answer 2

the combination of strategies in a game such that neigher player has any incentive to change strategies given the strategy of his opponent

Question 3

Maximin Strategy

Answer 3

choosing the option that makes the lowest payoff one can receive as large as possible

Question 4

Commitment Device

Answer 4

a device that commits a person to behave in a certain way iin the future, even though he may wish to behave otherwise when the time comes

Question 5

Cournot Model

Answer 5

oligopoly model in which each firma ssumes that rivals will continue producing their curren toutput levels

Question 6

Reaction Function

Answer 6

a curve that tells the profit-maximizing level of output for one oligopolist for each amount supplied by another

Question 7

The Bertrand Model

Answer 7

oligopoly model in which each firm assumes that rivals will continue charging their current prices