Game theory and cases

Question 1

Finite games characteristcs

Answer 1

Can be solved from backwards induction

Question 2

Infinite games

Answer 2

are those in which the game is being played infinite numbers

Question 3

Characteristics of a threat:

Answer 3

Must decrease one’s own payoff for it to be a threat

Question 4

Characteristics of a threat:

Answer 4

Must decrease one’s own payoff for it to be a threat

Question 5

Characteristics of a threat:

Answer 5

Must decrease one’s own payoff for it to be a threat
Otherwise no incentive to comply as threatened party will think that you no matter what will follow through with your threat

Question 6

Brink of distaster?

Answer 6

Deliberately introduce (reversible) risk:
of an irrational act
The threat is now credible:
- The risk replaces it
- Giving up some control adds credibility.

Question 7

How to counter other’s strategic moves

Answer 7

• Develop reputation for irrationality
• cut of communication
• leave escape routes
• undermine other’s motivation to uphold reputation
• Use salami tactics (cold war - nuclear weapons)