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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
What is an example of the Prisoners' Dilemma in competition between firms?
Boeing versus Airbus
26
What is an example of the Prisoners' Dilemma in a bidding context?
House bidding
27
What dilemma arises from GHG emissions in climate change policy?
Incentives to avoid action
28
What is the ideal action for addressing climate change?
Collective action
29
Can international law force sovereign nations to act?
No
30
What can help ensure countries abide by agreements?
Import tariffs
31
What are some government incentives for unilateral mitigation?
Political platform, local pollution
32
What is the dominant strategy in the pricing variant?
LOW
33
What outcome do both firms get when they choose LOW?
Low payoff
34
What would be best for both firms if they could agree?
HIGH prices
35
Why is any agreement to collude unstable?
Cheating possible
36
How many Nash Equilibria are there in the Price Matching Game?
2
37
What is the outcome for consumers if firms effectively collude with high prices?
Not good
38
What is a key feature of games not resembling the Prisoner's Dilemma?
No dominant strategy
39
What is the TREMBLING-HAND Nash Equilibrium?
Optimal choice with rival tremble
40
What is a maxi-min strategy?
Highest among lowest payoffs
41
When is a maxi-min strategy chosen?
Worst outcome as good as can be
42
What is the nature of strategies in the Coordination Game?
No Dominant Strategy
43
Can a cooperative outcome be achieved in a non-cooperative game?
Yes, but no guarantee
44
What is the First-Mover Advantage?
Responding to choices
45
What is the Second-Mover Advantage?
Responding accordingly
46
What is another name for the 'Game of Chicken'?
GAME of CONFLICT
47
What is the goal of the 'Game of Chicken'?
Prove bravery
48
What is the main issue in the Game of Chicken?
Signaling intentions
49
Why might it be optimal to be viewed as 'crazy' in conflict?
To discourage escalation
50
What does game theory identify about decision makers?
Anticipate others' choices
51
What can game theory show about outcomes?
Sub-optimal outcomes
52
What does game theory provide rationale for?
Coordinating activities
53
Braess's paradox
Traffic congestion worsen when extra capacity added.
54
What should we understand to analyze complex system performance?
Incentives and interactions

ECON111 (34 decks)

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