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ECON111 > Module_01_strategic-games > Flashcards

Module_01_strategic-games Flashcards

1
Q

What is the definition of non-strategic decisions?

A

No impact on market outcomes and others’ well-being.

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2
Q

Examples of non-strategic decisions

A

Shopping on Amazon, walking in a park, installing a kitchen.

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3
Q

Example of a negative externality

A

Car use endangering cyclists

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4
Q

Example of a positive externality

A

Backyard garden providing habitat for birds

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5
Q

Example of a negative congestion effect

A

Car use making it harder for others to get about

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6
Q

Example of a positive congestion effect

A

Joining Facebook benefiting other users

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7
Q

What are strategic decisions?

A

Choices affecting others

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8
Q

Why anticipate others’ choices?

A

To maximize personal benefit

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9
Q

What is game theory?

A

Branch of mathematics

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10
Q

Name an example of game theory in personal interactions.

A

Driving your car

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11
Q

Give an example of game theory in market competition.

A

Coke vs Pepsi

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12
Q

What is the name of the game where competitors try to match each other’s prices?

A

Price Matching Game

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13
Q

What is the name of the game where two cars drive towards each other?

A

Game of Chicken

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14
Q

What is the name of the game where adding more roads to a network can slow down traffic?

A

Driving Game

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15
Q

What is the key idea of Non-cooperative Game Theory?

A

Best choice strategy

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16
Q

What is the equilibrium formed by the selection of strategies called?

A

Nash Equilibrium

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17
Q

What characterizes a Nash Equilibrium?

A

No unilateral deviation

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18
Q

What is a ‘no regrets’ equilibrium?

A

No agent regrets choice

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19
Q

What is it called when agents can commit to agreements?

A

Cooperative Game Theory

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20
Q

What is it called when agents cannot commit to agreements?

A

Non-Cooperative Game Theory

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21
Q

What may agents engage in if no enforcement mechanism exists?

A

‘Cheap talk’

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22
Q

How does the home team benefit in ice hockey?

A

Line-matching

23
Q

What is the main theme of the Prisoner’s Dilemma?

A

Incentives to confess

24
Q

What issue arises from the agents’ inability to cooperate?

A

Sub-optimal outcome

25
Q

What is an example of the Prisoners’ Dilemma in competition between firms?

A

Boeing versus Airbus

26
Q

What is an example of the Prisoners’ Dilemma in a bidding context?

A

House bidding

27
Q

What dilemma arises from GHG emissions in climate change policy?

A

Incentives to avoid action

28
Q

What is the ideal action for addressing climate change?

A

Collective action

29
Q

Can international law force sovereign nations to act?

A

No

30
Q

What can help ensure countries abide by agreements?

A

Import tariffs

31
Q

What are some government incentives for unilateral mitigation?

A

Political platform, local pollution

32
Q

What is the dominant strategy in the pricing variant?

A

LOW

33
Q

What outcome do both firms get when they choose LOW?

A

Low payoff

34
Q

What would be best for both firms if they could agree?

A

HIGH prices

35
Q

Why is any agreement to collude unstable?

A

Cheating possible

36
Q

How many Nash Equilibria are there in the Price Matching Game?

A

2

37
Q

What is the outcome for consumers if firms effectively collude with high prices?

A

Not good

38
Q

What is a key feature of games not resembling the Prisoner’s Dilemma?

A

No dominant strategy

39
Q

What is the TREMBLING-HAND Nash Equilibrium?

A

Optimal choice with rival tremble

40
Q

What is a maxi-min strategy?

A

Highest among lowest payoffs

41
Q

When is a maxi-min strategy chosen?

A

Worst outcome as good as can be

42
Q

What is the nature of strategies in the Coordination Game?

A

No Dominant Strategy

43
Q

Can a cooperative outcome be achieved in a non-cooperative game?

A

Yes, but no guarantee

44
Q

What is the First-Mover Advantage?

A

Responding to choices

45
Q

What is the Second-Mover Advantage?

A

Responding accordingly

46
Q

What is another name for the ‘Game of Chicken’?

A

GAME of CONFLICT

47
Q

What is the goal of the ‘Game of Chicken’?

A

Prove bravery

48
Q

What is the main issue in the Game of Chicken?

A

Signaling intentions

49
Q

Why might it be optimal to be viewed as ‘crazy’ in conflict?

A

To discourage escalation

50
Q

What does game theory identify about decision makers?

A

Anticipate others’ choices

51
Q

What can game theory show about outcomes?

A

Sub-optimal outcomes

52
Q

What does game theory provide rationale for?

A

Coordinating activities

53
Q

Braess’s paradox

A

Traffic congestion worsen when extra capacity added.

54
Q

What should we understand to analyze complex system performance?

A

Incentives and interactions

ECON111 (31 decks)

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